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Bookkeeping and keeping a track of all the incomes, revenues, and expenditures of your organization are an important part of every business. Bookkeeping Edmonton provides you the current financial position of your organization and plan for future business projects. If you are planning to start with bookkeeping by yourself, then here is a step-by-step bookkeeping process for you.
Step 1: Create an Organized Structure
Before getting started with bookkeeping, you first need to establish a well-defined structure. This structure must include the kind of system you will use for bookkeeping, say automating the process with the help of an accounting software or doing it manually with the help of spreadsheets. Once you have a system in place, make sure you follow the same system for bookkeeping in the future.
Step 2: Select your Accounting Method
There are two types of accounting methods - cash and accrual. In the cash method, revenues, and expenses are only recorded when the amount is actually received or paid. And, in the accrual method, incomes, revenues, and expenses are recorded when the transaction takes place, even if the amount is not received or payment is made on a future date. The best accounting method for small businesses is the cash method as it gives an accurate representation of the balance of the organization.
Step 3: Record Every Transaction
Make sure you record each and every revenue, credit, and expense to avoid confusions. You can either follow a single-entry bookkeeping or double-entry bookkeeping system. A single-entry system involves recording the income and the expenses only once. Whereas in a double-entry bookkeeping system, there are at least two accounting entries that need to be accounted for each transaction.
Step 4: Create Separate Accounts for Transactions
The best way to make bookkeeping easier is to separate the transactions into different accounts within the ledger. Separating the accounts can give you a clearer idea of all the incomes and expenses for various purposes. You can separate the transactions into accounts like cash, inventory, payroll or wages, owner’s equity, accounts receivable, accounts payable, etc.
Step 5: Update and Check Regularly
Make sure you record the transactions on a regular basis to avoid any confusions or misrepresentation of the information. The best way to do it is to regularly record the incomes and expenses as and when they take place. Also, make sure you check your accounts and records on a regular basis to see if there is any mistake or any missing record.
Bookkeeping is an easy process if done correctly and regularly. But, if you think that managing bookkeeping Edmonton on your own is a difficult task, you can outsource the task to a reliable accounting and bookkeeping firm in Edmonton. They will manage your accounting without any errors and in an effective manner.