If you have categorized the whole payment to a single expense, your books are probably incorrect. Loan paymentsĭo you have loan payments on your books? You may not have accounted for the principle and interest portions of the payments correctly. Unreconciled transactionsĭo you have unreconciled transactions on your books? Your books cannot be complete until all transactions that occurred in 2015 are categorized correctly. Rather than list a million things you should be doing, we will list some of the most common bookkeeping pitfalls and how you can avoid them, starting with unreconciled transactions. If the latter happens, not only will you not be eligible for deductions, you might end up owing the IRS money. If you don't, not only could you lose out on thousands of dollars in potential deductions-you could also lose compliance with the IRS. How you go about doing your books is up to you, but even if you don't use a 3rd party bookkeeping service you must keep solid records of business transactions. Whether you are a freelance illustrator or a multi-billion dollar car company-you need to implement proper bookkeeping techniques.
There are several standard methods of bookkeeping, such as the single-entry bookkeeping system and the double-entry bookkeeping system, but, while they may be thought of as "real" bookkeeping, any process that involves the recording of financial transactions is a bookkeeping process. Transactions include purchases, sales, receipts, and payments by an individual person or an organization/corporation. Or for the real nerds out there (and don't worry, that includes most of us here in the office), here's the Wikipedia answer:īookkeeping is the recording of financial transactions, and is part of the process of accounting in business. Since there is a lot of information contained on this page, we recommend you bookmark this page and refer to it often.īookkeeping is simply keeping tabs on all of your financial transactions pertaining to business expenses. Decide if it's something you really can and should do. Decide which bookkeeping methodology to use (yes, there's more than one way to keep your books.)Ĭ.
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The purpose of this article is to give business owners a full overview of what bookkeeping entails so that they can:Ī. Welcome to Bookkeeping 101, where you'll learn Everything you Should Know About Bookkeeping basics (And Then Some)
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