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Lily Chambers

What should I know about accounting and bookkeeping?

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What should I know about accounting and bookkeeping?

The importance of keeping adequate records cannot be stressed too much. Without financial records, you cannot determine how well your business is doing or where it is going. At a minimum, records are needed to substantiate:

  1. Your tax returns under federal and state laws, including income tax and Social Security laws;
  2. Your request for credit from vendors or a loan from a bank; and
  3. Your claims about the business, should you wish to sell it.

What other items do you feel are important for your businesses bookkeeping needs?

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Well I am based in Jamaica but I think what I more have to focus on is Tax and how much I am earning and spending. I think in the US it's more along those lines that you suggested.


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I like to know my monthly profit/loss as it determines a ton of things for me both in my business and personally like:


1. How much more I can spend on marketing per month on top of what I've already allotted.


2. It lets me know if I have any extra unexpected lipstick money to spend. If it's an awesome month I may go traveling somewhere to treat myself.


3. Knowing my profits per month helps me know amount I should tithe at church each week.


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Well, it's most important to know your company's financial health and then after there are many other factors.

 

  • Limit your CRA audit,
  • Make it sure that you are not missing deductions,
  • Your seasonal cash flow.
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You must know these basic concepts:

Accounting is basically calculating & measuring the various processes of financial statements & records in a systematic manner.

Accounting methods:

1. Accrual method

2. Cash flows

3. Trial balance

4. Profit & loss statements

5. Balance sheet

6. Financial statement analysis

Whereas Bookkeeping keeps your books & financial data, transactions of the business completely maintained.

Bookkeeping methods:

1. Single entry

2. Double entry

3. Bookkeeping software

4. Virtual bookkeeping

Edited by Keddy Daniel

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