Bookkeeping Basics For The Online Business

Today, we're diving into the fundamental topic of 'Bookkeeping Basics'—knowledge every online business should have at their fingertips. Consider this your friendly chat about the financial heart of your business.

1. Understanding Bookkeeping:

Alright, let's start at the beginning. Bookkeeping is like your business's financial diary. It records every financial transaction, from sales to expenses, in an organised system. It allows you to see how your business is performing.

2. The Importance of Accuracy:

In bookkeeping, accuracy is king. A small error can lead to significant financial hiccups. Always double-check your entries. The smallest of error can lead to the biggest of financial mistakes – whether that not enough cashflow moving through the business or penalties and fines from HMRC.

3. Keep Business and Personal Separate:

This one's crucial: NEVER mix personal and business finances. Separate bank accounts and credit cards are a must - Plus, your bookkeeper/accountant is likely to charge you more if they have to wade through all your personal transactions to get to the business stuff!

4. Choose a Bookkeeping Method:

You've got options here. Very small businesses tend to use manual spreadsheets, while others prefer digital accounting software like QuickBooks or Xero. Find what suits your business best and stick with it.

Here at Emerald Sky Accounts we use Xero as it is suited to the majority of business sizes. In our opinion, it is one of the best softwares and allows to you integrate many other apps into it. As your business grows this software grows with you – No need to change software just as things are starting to get busy.

5. Track Income:

Keep tabs on every penny coming into your business. This includes sales, payment processors, commissions, affiliate marketing, and any other sources of income. This also includes fees on income – many businesses forget to record fees for their payment processors like Paypal and Stripe. This will make your sales look higher than they actually are, and may end up making you pay the tax man more than you need to!

6. Record Expenses:

Don't forget to jot down every expense, no matter how small. This includes rent, utilities, office supplies, and that morning coffee (if it's a business meeting). Categorise expenses so that you’re able to understand where your money is spent. This will give you an insight where you may be able to save.

7. Stay Organised:

Organisation is your secret weapon. Keep receipts, invoices, and financial documents neatly filed and easily accessible. With the invention of data capture software, there is no need to have filing cabinets full of paperwork. Store all your receipts on the computer or in the cloud (backed up in case anything should go wrong).

8. Regular Updates:

Don't let your bookkeeping pile up. Make it a habit to update your records at least once a week to stay on top of things.

9. Bank Reconciliation:

Regularly reconcile your bank statements with your bookkeeping records to catch any discrepancies and ensure that your bookkeeping is correct.

10. Financial Reports:

Master the art of financial reporting. Balance sheets, income statements, and cash flow statements are your windows into your business's financial health - That’s a whole other blog post!

11. Seek Professional Help:

When in doubt, consult a professional bookkeeper or accountant. They can help you stay on top of this task and can provide you will all the useful information you will need to move your business forward. A good bookkeeper will always have the information to hand that you need, and if not, they will find it for you!

So, there you have it—bookkeeping basics in a nutshell. These are the foundations that will keep your online business thriving. Embrace them, and you'll be well on your way to financial success!

If you would like Emerald Sky Accounts to help you to get to grips with your bookkeeping, get it touch. We like to think of ourselves as your financial wingman! We are here to help!