Before you can run you need to learn to walk, before you learn to walk you need to learn how to crawl. You cannot jump or skip the basic. You might heard of the popular saying that goes, "Stick with the Basics" or "Go back to the Basics." Let me share you some basics about corporate secretarial services, accounting and bookkeeping services and Singapore accounting service.
Basic of bookkeeping and accounting is monitoring and filing -- to monitor income and expenses of the company which gives greater chances of making a profit. File all necessary information. Create financial reports.
Three basic steps in book keeping:
Receipts
-Keep records, receipts or any transactions of payment and all expenses of the business.
- All revenues and expenses of the company
Ledgers
- This where all revenues and expenses of the company is being keep track.
- Every expenses and income should be post (means entering all transaction of the company to the ledger)
Financial Reports
Financial reports consist of several part of the company's financial information. Not like the ledger which give you information about your revenue and expenses. Financial Report tells you if you are making profit or losing money. Even comparing your monthly totals of income and expenses won't tell you whether your credit customers are paying fast enough to keep adequate cash flowing through your business to pay your bills on time.
Most common types of bookkeeping accounts for a small business that you should know:
Capital or Money - All compamy's business transactions goes to the Cash account. This is a vital part which book keepers have two journals or ledgers
Types of journals
Cash Receipts and Cash Disbursements
Account receivables
Cash. It doesn’t get more basic than this. All of your business transactions pass through the Cash account, which is so important that often bookkeepers actually use two journals -- Cash Receipts and Cash Disbursements -- to track the activity.
Accounts Receivable. If your company sells products or services and doesn’t collect payment immediately you have “receivables” and you must track Accounts Receivable. This is money due from customers, and keeping it up to date is critical to be sure that you send timely and accurate bills or invoices.
Inventory. Products you have in stock to sell are like money sitting on a shelf and must be carefully accounted for and tracked. The numbers you have in your books should be periodically tested by doing physical counts of inventory on hand.
Accounts Payable. No one likes to send money out of the business. But it’s a little less painful if you have a clear view of everything via your Accounts Payable. Good bookkeeping helps assure timely payments and – importantly – that you don’t pay anyone twice. Paying bills early can also qualify your business for discounts.
Loans Payable. If you’ve borrowed money to buy equipment, vehicles, furniture or other items for your business, this is the account that tracks what’s owed and what’s due.
Sales. The Sales account is where you track all incoming revenue from what you sell. Recording sales in a timely and accurate manner is critical to knowing where your business stands.
Purchases. The Purchases Account is where you track any raw materials or finished goods that you buy for your business. It’s a key component of calculating “Cost of Goods Sold” (COGS), which you subtract from Sales to find your company’s gross profit.
Payroll Expenses. This is the biggest cost of all for many businesses. No matter how much you beg, few people want to work for nothing. Keeping this account accurate and up to date is essential for meeting tax and other government reporting requirements. Shirking those responsibilities will put you in serious hot water.
Owners’ Equity. This account has a nice ring to it. Basically, it tracks the amount each owner puts into the business. “Many small businesses are owned by one person or a group of partners; they’re not incorporated, so no stock shares exist to divide up ownership,” says Epstein. “Instead, money put into the business is tracked in Capital accounts, and any money taken out appears in drawing accounts. In order to be fair to all owners, your books must carefully record all Owners’ Equity accounts.
Retained Earnings. The Retained Earnings account tracks any of your company’s profits that are reinvested in the business and are not paid out to the owners. Retained earnings are cumulative, which means they appear as a running total of money that has been retained since the company started. Managing this account doesn’t take a lot of time and is important to investors and lenders who want to track how well the company has done over time.
Many business owners think of bookkeeping as an unwelcome chore. But if you understand and make effective use of the data your bookkeeper collects, bookkeeping can be your best buddy, helping you run your business more effectively.
Basic of bookkeeping and accounting is monitoring and filing -- to monitor income and expenses of the company which gives greater chances of making a profit. File all necessary information. Create financial reports.
Three basic steps in book keeping:
Receipts
-Keep records, receipts or any transactions of payment and all expenses of the business.
- All revenues and expenses of the company
Ledgers
- This where all revenues and expenses of the company is being keep track.
- Every expenses and income should be post (means entering all transaction of the company to the ledger)
Financial Reports
Financial reports consist of several part of the company's financial information. Not like the ledger which give you information about your revenue and expenses. Financial Report tells you if you are making profit or losing money. Even comparing your monthly totals of income and expenses won't tell you whether your credit customers are paying fast enough to keep adequate cash flowing through your business to pay your bills on time.
Most common types of bookkeeping accounts for a small business that you should know:
Capital or Money - All compamy's business transactions goes to the Cash account. This is a vital part which book keepers have two journals or ledgers
Types of journals
Cash Receipts and Cash Disbursements
Account receivables
Cash. It doesn’t get more basic than this. All of your business transactions pass through the Cash account, which is so important that often bookkeepers actually use two journals -- Cash Receipts and Cash Disbursements -- to track the activity.
Accounts Receivable. If your company sells products or services and doesn’t collect payment immediately you have “receivables” and you must track Accounts Receivable. This is money due from customers, and keeping it up to date is critical to be sure that you send timely and accurate bills or invoices.
Inventory. Products you have in stock to sell are like money sitting on a shelf and must be carefully accounted for and tracked. The numbers you have in your books should be periodically tested by doing physical counts of inventory on hand.
Accounts Payable. No one likes to send money out of the business. But it’s a little less painful if you have a clear view of everything via your Accounts Payable. Good bookkeeping helps assure timely payments and – importantly – that you don’t pay anyone twice. Paying bills early can also qualify your business for discounts.
Loans Payable. If you’ve borrowed money to buy equipment, vehicles, furniture or other items for your business, this is the account that tracks what’s owed and what’s due.
Sales. The Sales account is where you track all incoming revenue from what you sell. Recording sales in a timely and accurate manner is critical to knowing where your business stands.
Purchases. The Purchases Account is where you track any raw materials or finished goods that you buy for your business. It’s a key component of calculating “Cost of Goods Sold” (COGS), which you subtract from Sales to find your company’s gross profit.
Payroll Expenses. This is the biggest cost of all for many businesses. No matter how much you beg, few people want to work for nothing. Keeping this account accurate and up to date is essential for meeting tax and other government reporting requirements. Shirking those responsibilities will put you in serious hot water.
Owners’ Equity. This account has a nice ring to it. Basically, it tracks the amount each owner puts into the business. “Many small businesses are owned by one person or a group of partners; they’re not incorporated, so no stock shares exist to divide up ownership,” says Epstein. “Instead, money put into the business is tracked in Capital accounts, and any money taken out appears in drawing accounts. In order to be fair to all owners, your books must carefully record all Owners’ Equity accounts.
Retained Earnings. The Retained Earnings account tracks any of your company’s profits that are reinvested in the business and are not paid out to the owners. Retained earnings are cumulative, which means they appear as a running total of money that has been retained since the company started. Managing this account doesn’t take a lot of time and is important to investors and lenders who want to track how well the company has done over time.
Many business owners think of bookkeeping as an unwelcome chore. But if you understand and make effective use of the data your bookkeeper collects, bookkeeping can be your best buddy, helping you run your business more effectively.