Your Basic Bookkeeping

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To succeed in business, one of your most important tools is financial analysis, based on your business records. Accurate financial records will help you answer some very important questions. Are you making money, or losing it? How much? Is your business on sound financial ground, or are troubles lurking ahead? A sound bookkeeping system is the foundation on which all of this valuable financial information can be built.

As a small business owner, you probably rely on an outside accountant to do your taxes and prepare financial statements. However, like many small business owners, you may find that it's too expensive to pay an accountant to do routine bookkeeping chores. Someone in your organization must take on the responsibility of keeping an accurate set of financial records. Fortunately, you may find this task easier than you thought, especially if you use your computer.

In the following sections, we'll discuss:

• the importance of good records
• working with your accountant
• the accounting system and accounting basics
• how to record daily transactions
• closing the books at the end of an accounting period
• preparing financial statements
• tax accounting and how it compares to your financial accounting