"Bookkeeping System"

When you first started your business, you invested money, inventory and equipment. In accounting terms, this is called owners equity. You may also have taken out some loans. These transactions are the relationship elements that make up the basis for the accounting equation: assets are equal to the liabilities plus owners equity. 

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Be honest, you are in business to make money, not loose money. This money is the revenues that are derived from fees earned or sales from exchange of goods, rent from use of property, and interest income from lending of money. As a result of operations, expenses are incurred. This uses up assets usually in the form of cash. These are for services rendered, such as utilities, rent expense, interest expense, supplies, and for miscellaneous items. 

These revenues and expenses affect owner's equity. If your business makes a net income, there is an increase in owner's equity. If you incur a loss, owner's equity decreases. As a result of these transactions, revenue and expenses are placed under the 'umbrella' of owner's equity. Since there is a relationship between revenue and expenses, then there must be an efficient bookkeeping system in place. 

The following are steps for an efficient and accurate bookkeeping system and should be done either on a daily, weekly, or monthly basis:

• All checks written and deposits should be entered into a check register.
• A monthly bank reconciliation should be done to make sure that all transactions incurred during the month have been recorded properly. Make sure the ending cash balance matches that of the adjusted bank balance.
• All expenses should be classified and entered to record the expenditures.
• All deposits made to the account should classified and recorded to the proper account (income, interest income, or owners contribution.
• Preparation of a financial statement shuld be done on a monthly or quarterly basis to fully understand the results or your operation.

Following this bookkeeping system will help you run an efficient business. But remember, you must properly identify your deposits correctly, whether they are from income or your own contributions.

There are two basic ways you can record your transactions. One is by the old way: entering them onto a paper one write columnar sheet or by a computerized bookkeeping system.  After you record the entry of a transaction, the data is available in several reports (income statement, cash disbursement register, balance sheet, statement of cash flows, and the owner's equity or statement of retained earnings). These statements will help you to understand how your business is doing, whether it is in profit or in a loss. A computerized bookkeeping system must be used properly, so that all transactions are recorded properly. You can do it yourself and hope it is accurate, or you can outsource your bookkeeping to a professional and save both time and money. A professional has resources that you, the business owner, don't have. Our bookkeeping service has not only updated software and the equipment, but also a professional network of others in both the tax and accounting arenas.