People running a small business have many things to take care of, and it becomes difficult to manage the finances of the company regularly. It can lead to great confusion if you need to learn how to do accounting for small business. Therefore, during the early days of the business, all small businesses in Atlanta should either learn how to do accounting for their business or hire a professional CPA in Atlanta.
This blog will cover how to do bookkeeping for a small business and how to set up an accounting system. See the details below:
How to do bookkeeping for a small business?
The following procedures need to be followed to do bookkeeping for a small business:
- Check your financial transactions regularly.
First, you need to start by analyzing the financial transaction and making only those entries that are related to your business in the records. For example, your personal loans should be separated from your business documents. The first step would be to prepare business documents, which will be the foundation of recording your transactions.
- Keep the journal entries up-to-date.
All business transactions are usually recorded in chronological order in a journal by applying the double-entry system method. In each journal entry, there should be two accounts: debit and credit.
To set up this process, accountants use special journals that can be used to record recurring transactions like sales, purchases, and cash receipts related to the business. If any transitions do not fit in these special journals, they are recorded in the general journal.
- Maintain a general ledger.
The general ledger is a record of all accounts that shows the changes made to each account from previous transactions and the current balance in all accounts. The final record of each transaction in a general ledger is necessary, as it is also referred to as the Books of Final Entry.
- Prepare a trial balance.
A trial balance is created to check if the total debits match the total credits. In this process, account balances are removed from the ledger and organized into a detailed financial report. Most importantly, the debit column total should be equal to the credit column total.
- Adjust the entries and prepare an adjusted trial balance.
Next in the process, you must adjust entries to update summarized accounts in the statements. After adjusting the entries, prepare an adjusted trial balance sheet and create financial statements.
By following this process, your small businesses can easily manage their finances and account for the company.
Comments are closed.