The Bookkeeping Basic You Can’t Afford to Ignore

Millions of small business owners and startup entrepreneurs are masters at creating great products and services, building effective teams and winning over customers. However, not everyone of them excels at basic bookkeeping; many of them would probably flunk it.

If you own a business and you don’t understand the different types of “accounts” your bookkeeper uses to organize your finances, measuring the success (or failure), all of your efforts will be fruitless.

To make it easy for you, below is the list of some basic types of bookkeeping accounts for a small business:

  • Cash. It cannot get more basic than this! All 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,” or money due from customers. You must track Accounts Receivable and keep it up to date so that you send timely and accurate bills or invoices to your customers.

  • Inventory. Products in stock that are unsold, resemble money sitting on a shelf and must be carefully accounted for and tracked. The numbers in your books should be periodically checked by doing physical counts of inventory on hand.

  • Accounts Payable. No one likes to send money out of the business, but a clear view of everything via your Accounts Payable makes it a little less throbbing. Clear yet comprehensive bookkeeping helps assure timely payments and avoid paying someone 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 account shows payments with their due dates.

  • Sales. The Sales account keeps a track of all incoming revenue from what you sell. Doing so in a timely and accurate manner is critical to knowing where your business stands.

  • Purchases. The Purchases Account keeps the data about 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 when subtracted from Sales helps you find your company’s gross profit.

  • Payroll Expenses. For many businesses, payroll expenses can be the biggest cost of all. Keeping this account accurate and up to date is essential for meeting tax and other government reporting requirements.

  • Owners Equity. This account keeps an eye on the amount an owner (or owners) puts into the business. Also referred to as net assets, owners equity reflects the amount of money an owner has once liabilities are subtracted from assets.

  • Retained Earnings. The Retained Earnings account tracks any company 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 the company has performed over time.

Many business owners think bookkeeping is a dreaded chore, but if you understand and effectively use the data your bookkeeper collects, bookkeeping can be your best partner. If you need help with your bookkeeping or just want to run your business more effectively than now, contact Opulent Accountants today to get paired with a mentor!

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Moumita Ghosh
Moumita Ghosh
2020-11-18
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We've been meeting Dayan for years now and he is great with his advice and is very knowledgeable and pragmatic. We recently used his services to get the home loan for our house and he and his team went above and beyond to get us the best possible deal. Ishara in his team was super communicative and responsive in following through and made the process very easy for us. Highly recommend them!
Cara Neela
Cara Neela
2020-10-24
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Dayan and Hasi are wonderful, wouldn’t hesitate to recommend them! They went through all with a fine tooth comb to ensure all was correct. Thanks to you both and the Opulent team!
Jason Barry
Jason Barry
2020-09-29
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I was looking for a different accountant and was recommended to Opulent Accountants. I have been blown away with there service. I wish I moved accountant sooner. Platinum Plumbing Enterprises P/L
Afshin Koohestani
Afshin Koohestani
2020-09-10
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Uditha Illeperuma
Uditha Illeperuma
2020-09-08
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Opulent Finance gave professional advice for my unique home loan requirement. They respond quickly with the proper information. The process was smooth and I felt comfortable to deal with the team. The team is friendly and professional to deal with. Highly recommended for any one looking for finance.
Dinesh Fernando
Dinesh Fernando
2020-09-03
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Very happy with the service provided in getting my tax returns done. Mr. Dayan is very helpful and professional and has extensive knowledge in his field of expertise. Highly recommend if you are looking for a hassle free and prompt service.
Ronald Turner
Ronald Turner
2020-07-16
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Opulent were absolutely fantastic to deal with, they are competitively priced and incredibly proactive and friendly. For me I have been much better off using their fantastic services as opposed to doing tax returns myself. Sum was amazing, incredibly knowledgable and super friendlyI'll certainly be back with Opulent next year
Milinda Wickramasinghe
Milinda Wickramasinghe
2020-07-05
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Opulent team has been fantastic and it has been truly a pleasure dealing with the team for more than 10 years. Dayan and Ishara have gone above and beyond to assist and communicated with me even when I was overseas. Excellent service has being provided in a professional and timely manner. I would highly recommend the team.
Chami Ranaweera
Chami Ranaweera
2020-04-28
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I have been working with Dayan last 9 years. All of my loans, refinance and tax are done through Opulent.Dayan and his team including Ishara are very helpful and easy to deal.
Edmund Lobo
Edmund Lobo
2019-12-02
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We were new entrants to the cattle farming scene. All the rules and regulations surrounding primary production can be very confusing. The team at Opulent Accountants walked us through all the steps, set up the necessary ABNs and Company / Trust accounts, filed the related pending BAS and Tax returns, and is currently keeping us up-to-date with all ATO related transactions. We recommend them highly to all.