Bookkeeping 101: Bookkeeping Basics for Small Businesses

Though you may not work regularly with a tax specialist year-round, you’ll want to connect with one sooner rather than later so you’re not rushed come tax time. At the same time, businesses need to make sure they pay their own bills on time to avoid late fees and maintain a solid reputation. These expenses that haven’t been paid yet are categorized as accounts payable.

Speaking up and giving your take on a situation provides valuable perspective. Banks tend to look at your income statement, cash flow history, and income tax returns when reviewing your application. A few employers offer on-the-job training for bookkeepers by providing internships and placement programs. According to the US Bureau of Labor Statistics (BLS), most bookkeepers can learn the profession’s basics in about six months [3]. Once you become a qualified bookkeeper, you can work as a permanent employee or freelancer.

Is Bookkeeping Right for You?

Single Entry where figures are entered once – this is the cash book – great for starting up small and for easing you in to the next method. You can also hire a bookkeeper to work directly for your business. If you go this route, make sure to brush up on interview questions that’ll help you determine who’s the best fit. Many or all of the products featured here are from our partners who compensate us.

Accounting software makes it easy to store these documents and reference them in case of an accounting error or audit. You should also browse the chart of accounts and make sure it’s organized in a way that makes sense for your business. Suppose you’re looking for support with your everyday bookkeeping needs. In that case, whether you’re a freelance bookkeeper with several clients or simply looking to handle the bookkeeping for your own business, FreshBooks can help. Our cloud-based bookkeeping software solution is quick, efficient, and capable of saving you countless hours of administrative work. From balance sheets to income statements, there’s no denying that there are new terms and phrases you’ll come across.

Is bookkeeping a stressful job?

You can then learn how to use multiple accounting software programs and work tools on the job. Internships can also provide ways for you to get your foot in the door with a specific organization. Bookkeepers are administrators first and foremost and are responsible for updating and maintaining financial transactions and reports. Accountants, on the other hand, are more like financial strategists.

Other smaller firms may require reports only at the end of the year in preparation for doing taxes. Bookkeeping in a business firm is an important, but preliminary, function to the actual accounting function. Bookkeeping is the process of keeping track of every financial transaction made by a business firm from the opening of the firm to the closing of the firm.

Here’s a crash course on small-business bookkeeping and how to get started. As you can see, the steps of how to become a bookkeeper and creating your own virtual bookkeeping business are quite simple. Every bookkeeping skill you need to become a bookkeeper can be found in your home. Mostly every business could find value in having someone look after their financial books and records. Benefits of this option include potentially fewer hours, choosing how many clients you work with, and the freedom to partner with bookkeeping companies to free up even more time. We’ve added 500+ learning opportunities to create one of the world’s most comprehensive free-to-degree online learning platforms.

Accounting Careers

If you’re planning a career that involves managing the books for a small or medium-sized business, a 90-minute course probably won’t cut it. Consider Harvard Business, which offers an eight-week-long Financial Accounting course that’ll take you from the basics of balance sheets all the way to valuing a new investment opportunity. The class continues with more advanced topics, like how to analyze the capital structure of a company and determine various accounting ratios (leverage ratios, profitability ratios, asset ratios, etc.).

Their programs are offered in the evenings so you don’t have to quit your current job while you pursue your certification. If you opt for their Fast Track program, you can have your certification in as little as three months. Small businesses also manage their own accounts receivable to make sure they get paid on time for goods and services that have already been bought or rendered. The process involves sending estimates and invoices and keeping track of due dates. Some accounting software comes with invoicing features, like automated payment reminders, or you may opt for separate invoicing software.

START A NEW CAREER

While more education is always a bonus, many successful freelance bookkeepers start right out of secondary school. In this guide, we’ll walk you through the steps needed to become a bookkeeper and start your own bookkeeping business. But as with any other enterprise, running your own bookkeeping business takes some key elements of preparation and knowledge. That’s why we’ve created a handy checklist so you can do bookkeeping like a pro.

Depending on the type of accounting system used by the business, each financial transaction is recorded based on supporting documentation. That documentation may be a receipt, an invoice, a purchase order, or some similar type of financial record showing that the transaction took place. To stay on top of these financial records, it’s important that a bookkeeper asks questions, and gets to the bottom of any discrepancies as fast as possible. Your input on business decisions as a bookkeeping professional is important to your employer or your clients.

Develop career skills and credentials to stand out

A Certified Bookkeeper (CB) designation illustrates that the individual has advanced bookkeeping skills. Intuit is dedicated to providing its employees with the ability to learn and grow throughout their time with our company. Once candidates are hired as employees, they will be provided with training assignments and other resources that prepare them for their positions. Intuit provides its employees with supplemental learning materials after training has been completed to assist employees in developing their skills. If you’re interested in being a freelance virtual bookkeeper, you can sign up for freelance marketplace websites to connect with potential clients.

Learners are advised to conduct additional research to ensure that courses and other credentials pursued meet their personal, professional, and financial goals. Managing the general ledger is part of your daily responsibilities as a bookkeeper. You may determine if any payments the definition, explanation and examples of tax free are due, submit them, and record them in the financial ledger. As a bookkeeper, you may also receive client payments and deposit them at your company’s financial institution. This course is completely online, so there’s no need to show up to a classroom in person.

For small businesses

The first three basics of bookkeeping discussed above are what you’ll find in the Balance Sheet. To balance the books, you need to carefully monitor the assets, liabilities, and equity. You may handle payroll functions as a bookkeeper, keep tax withholding records, and issue paychecks or send information to a contracted payroll service. Depending on the organization’s size, keeping track of business expenses and reconciling business statements may be your responsibility. Taking software-specific certifications can also enhance your credibility.

• The equity accounts include all the claims the owners have against the company.
• The Intuit Tax and Bookkeeping Talent Community is a great place to find remote bookkeeping jobs and access training material.
• Whether you are already in the bookkeeping field or just starting out, this guide can help you determine your next steps.
• Udemy has a variety of courses to help launch your bookkeeping career or help you along; see Udemy’s full selection of bookkeeping courses for more.
• The responsibilities handled by a service will depend on the provider, so be sure to discuss the scope of work and compare options to find the right fit.
• Customers schedule an appointment to have a bookkeeper review their transactions, and  multiple schedules are available to choose from.

According to 81 percent of CBs who interviewed for a new job after becoming certified, having a certification contributed to getting the interview [4]. With a certified bookkeeper designation, you are qualified to perform all critical functions through the adjusted trial balance and basic payroll for small to medium-sized businesses. You can learn bookkeeping for free and at a low cost through online courses. These courses focus on bookkeeping fundamentals to help improve bookkeeping knowledge and skills.

A virtual bookkeeper must meet the same educational requirements as an in-house or in-person bookkeeper. Therefore, you should consider the education opportunities discussed above. The Certified Bookkeeper (CB) program from the AIPB requires you to be a working bookkeeper or have at least one year of accounting education.

Forms – 30 free PDF forms that can be printed and used by small business owners who prefer manual bookkeeping, or anyone needing to practice. As of 2021, approximately 1.7 million people worked as bookkeeping, accounting, or auditing clerks. The BLS expects the field to have a 5 percent decline in growth from 2021 to 2031. Still, you should see 197,600 job openings each year over the next decade [3]. To become certified, you need to pass a four-part examination, show two years of full-time bookkeeping experience or 3,000 hours of freelance or part-time experience, and sign a code of ethics.