One of the most important, but also often times least understood or appreciated aspect of any business is its bookkeeping or accounting system. Many people are frightened by the thought of the work involved in setting up such a system, and the drudgery of daily maintenance.
There's really nothing complicated to bookkeeping - it's as simple as keeping a daily diary and/or maintaining your personal checkbook; but who does either of those things anymore, right? Com'on, this is the 21st Century! At the bottom line, it's simply a matter of keeping a record of your incoming monies (revenue, profits) and your outgoing monies (expenses).
So, the first thing you need to do is open a business account for your business endeavor. In its simplest "raw form", this is simply a matter of walking into your local bank and telling the accounts teller you would like to open a business account. They will get you started with filling out the necessary information, and you are on your way. For online platforms, PayPal has the option to choose between "personal" or "business" when setting up your account - and you can "upgrade" from personal to business later if you want to. Other major online platforms are similar when it comes choosing the type of account you want to set up. For PayPal and most other major online platforms, you have to choose to set up a business account if you have to choose to set up a business account if you are going to accept payments from a website - for example, running an online store and accepting payments directly through your website (as most 21 Century online stores do).
When I first started "in-business", I thought a "business account" always implied that it had to be extra complicated. I'm not going to lie - they can be; but, depending on the type of business you are setting up, a "business account" can be as simple as just a regular ol' dedicated checking and bank card account (for a small-time sole proprietor in the U.S. just starting out, for example). Of course, as your business grows, the type and structure of your account may grow as well. You may want a more "complicated" account, per say, as time goes on that can accept different forms of incoming payment methods and help you with keeping track of taxes.
Obviously, in this modern day and age, you can do everything I am about to say on your laptop, tablet, or phone with fancy, modern software and apps that can do it all for you and then some; but just humor me for a minute or two, if you will, as I am going to unfold these next steps at the most basic of basic levels - yes, by discussing how to do it using (Gasp! Heaven forbid!) pen/pencil and paper! There is a very simple reason behind this - the point I am stressing here is absolute simplicity! I am not trying to promote the "latest and greatest" bookkeeping/accounting app or software here; I am really just trying to breakdown and explain the system and process in the absolute simplest form possible! Nervous in the bookkeeping service? Here's how to go about bookkeeping at its most "raw", "primordial" roots! It isn't complicated!
Here is booking explained in its absolute simplest form:
Drop by the last remaining local stationery store in your area and pick up a loose-leaf notebook and a supply of paper. Grab some index tabs at the same time just for fun - these can either help you separate the months or the accountability sections for each item that is sold.
Assuming that you want to make it as simple as possible, while at the same time keeping it as efficient as is necessary - here's what you do and how you do it:
On the first page in your notebook, write on the top line and in the middle of the page: Tuesday, January 1st, 2019, or whatever day you officially start your business... Then, as your orders come in - however that may be - (i.e. when you start selling your goods and/or services) jot down, starting from the left side of the page, the amount you received or spent, for what, from whom, a method of contacting them (i.e. an email address, phone number, physical address, social media contact information, etc.) and other notes (if desired). The page might look like this:
There's really nothing complicated to bookkeeping - it's as simple as keeping a daily diary and/or maintaining your personal checkbook; but who does either of those things anymore, right? Com'on, this is the 21st Century! At the bottom line, it's simply a matter of keeping a record of your incoming monies (revenue, profits) and your outgoing monies (expenses).
So, the first thing you need to do is open a business account for your business endeavor. In its simplest "raw form", this is simply a matter of walking into your local bank and telling the accounts teller you would like to open a business account. They will get you started with filling out the necessary information, and you are on your way. For online platforms, PayPal has the option to choose between "personal" or "business" when setting up your account - and you can "upgrade" from personal to business later if you want to. Other major online platforms are similar when it comes choosing the type of account you want to set up. For PayPal and most other major online platforms, you have to choose to set up a business account if you have to choose to set up a business account if you are going to accept payments from a website - for example, running an online store and accepting payments directly through your website (as most 21 Century online stores do).
When I first started "in-business", I thought a "business account" always implied that it had to be extra complicated. I'm not going to lie - they can be; but, depending on the type of business you are setting up, a "business account" can be as simple as just a regular ol' dedicated checking and bank card account (for a small-time sole proprietor in the U.S. just starting out, for example). Of course, as your business grows, the type and structure of your account may grow as well. You may want a more "complicated" account, per say, as time goes on that can accept different forms of incoming payment methods and help you with keeping track of taxes.
Obviously, in this modern day and age, you can do everything I am about to say on your laptop, tablet, or phone with fancy, modern software and apps that can do it all for you and then some; but just humor me for a minute or two, if you will, as I am going to unfold these next steps at the most basic of basic levels - yes, by discussing how to do it using (Gasp! Heaven forbid!) pen/pencil and paper! There is a very simple reason behind this - the point I am stressing here is absolute simplicity! I am not trying to promote the "latest and greatest" bookkeeping/accounting app or software here; I am really just trying to breakdown and explain the system and process in the absolute simplest form possible! Nervous in the bookkeeping service? Here's how to go about bookkeeping at its most "raw", "primordial" roots! It isn't complicated!
Here is booking explained in its absolute simplest form:
Drop by the last remaining local stationery store in your area and pick up a loose-leaf notebook and a supply of paper. Grab some index tabs at the same time just for fun - these can either help you separate the months or the accountability sections for each item that is sold.
Assuming that you want to make it as simple as possible, while at the same time keeping it as efficient as is necessary - here's what you do and how you do it:
On the first page in your notebook, write on the top line and in the middle of the page: Tuesday, January 1st, 2019, or whatever day you officially start your business... Then, as your orders come in - however that may be - (i.e. when you start selling your goods and/or services) jot down, starting from the left side of the page, the amount you received or spent, for what, from whom, a method of contacting them (i.e. an email address, phone number, physical address, social media contact information, etc.) and other notes (if desired). The page might look like this:
That's all there is to it, and boiling it all down, it amounts to recording what you receive and what you spend.
The next entry, immediately under that first day's entry, might look like this:
The next entry, immediately under that first day's entry, might look like this:
And then, carry on with this recording of the money you receive and spend each day with similar entries for each day of the week - every day you are open for business, for each week. It's simple, uncomplicated, and a great record of your business activity.
Then at the end of each month, transfer this "daily diary" information into a bookkeeping register your tax consultant or accountant can work from. These people won't work from your daily diary, and will not transfer the information you record in it to a formal bookkeeping register without charging you a small fortune. It's not that big of a job, and if you do it after the close of business on the last day of each month, it will take at the most a very few minutes. Then, of course, when you're ready to do your taxes, you simply give your bookkeeping register to whoever is going to do your taxes, and you're home free.
As for the bookkeeping register you'll need, this can be any simple columnar notebook. All you really need is some sort of notebook with a number of columns marked off, a title written at the top of each column, and a record of the money received for each day relative to the product or service each column represents. Then at the end of each month, you can simply add the totals from each column and you'll instantly know how much money you took in from each of your offers.
Beyond the date column, will be your record of expenses or money spent. Again, you should title each of the columns you'll be entering figures into, and then record your expenditures for items falling into those categories. Then at the end of each month, it's a simple matter to add the totals from each column and know exactly where you stand relative to profit or loss - how much you took in compared to how much you spent.
Although there is a certain amount of "elbow grease" in the beginning when you are setting up your system, bookkeeping/accounting, at its core, is very simple and should not scare you. Just keep it simple, and up-to-date. And of course, don't forget the main point of this write-up: the intent and purpose of this passage was to explain bookkeeping in its "rawest", most basic form. In our 21st Century world you have numerous high-powered software packages that can do all of these things for you and then some; this write-up did not discuss any of those, as the intent of this passage was only to explain the basics in simplest form.
Then at the end of each month, transfer this "daily diary" information into a bookkeeping register your tax consultant or accountant can work from. These people won't work from your daily diary, and will not transfer the information you record in it to a formal bookkeeping register without charging you a small fortune. It's not that big of a job, and if you do it after the close of business on the last day of each month, it will take at the most a very few minutes. Then, of course, when you're ready to do your taxes, you simply give your bookkeeping register to whoever is going to do your taxes, and you're home free.
As for the bookkeeping register you'll need, this can be any simple columnar notebook. All you really need is some sort of notebook with a number of columns marked off, a title written at the top of each column, and a record of the money received for each day relative to the product or service each column represents. Then at the end of each month, you can simply add the totals from each column and you'll instantly know how much money you took in from each of your offers.
Beyond the date column, will be your record of expenses or money spent. Again, you should title each of the columns you'll be entering figures into, and then record your expenditures for items falling into those categories. Then at the end of each month, it's a simple matter to add the totals from each column and know exactly where you stand relative to profit or loss - how much you took in compared to how much you spent.
Although there is a certain amount of "elbow grease" in the beginning when you are setting up your system, bookkeeping/accounting, at its core, is very simple and should not scare you. Just keep it simple, and up-to-date. And of course, don't forget the main point of this write-up: the intent and purpose of this passage was to explain bookkeeping in its "rawest", most basic form. In our 21st Century world you have numerous high-powered software packages that can do all of these things for you and then some; this write-up did not discuss any of those, as the intent of this passage was only to explain the basics in simplest form.
