Small Business Monthly Bookkeeping
Small Business Quickbooks Monthly Bookkeeping requires Professional Financials. The Synergy Between Small Business Bookkeeping & Personal Tax Prep makes HK CPAs the Number One Choice in Peoria & the Phoenix Metro Area for Quickbooks Small Business Monthly Bookkeeping & Tax Prep.
Experience Clean Books for the First Time...and Every Time.
The History of Bookkeeping
Small Business Monthly Bookkeeping, commonly referred to as keeping the books, is the process of keeping full, accurate, up-to-date business records. Proper bookkeeping in Quickbooks can help businesses effectively manage cash flow, stay abreast of profits & losses, & develop plans for the future based on financial trends.
"Keeping the Books" has a long history that really began around 1497 with the "Father or Modern Bookkeeping," a close friend of Leonardo de Vinci, an Italian named Luca Bartolomes Pacioli.
Pacioli explained Bookkeeping quite simply:
“Accounts are nothing else than the expression in writing of the arrangement of his affairs. If he follows this system always he will know all about his business and will know exactly whether his business goes well or not.”
Quickbooks Bookkeeping involves making a record of the monies received by a business as well as the monies paid out. It encompasses money a company owes to vendors, employees, tax agencies, contractors & any other individual or entity (All are Balance Sheet Liabilities, AKA, how much you owe others).
Likewise, accurate records of amounts owed to your company by outside individuals & organizations are also recorded in a company's books (All are Balance Sheet Receivables, AKA, how much is owed to you).
Quickbooks Bookkeeping can be very time consuming & accuracy is of the utmost importance. This makes keeping the books in a rushed manner a very bad idea. With no exceptions, every monetary amount that is paid or received must be recorded in Quickbooks.
Small Business Quickbooks Monthly Bookkeeping
If you own a business in Peoria or anywhere in America, we recommend that you make an effort to understand how accounting works & to learn how to read & analyze a Balance Sheet & an Income Statement (P&L). To do so, you must first understand the Accounting Equation for your entity, Double-Entry Accounting & Debits & Credits.
A company's books are used to prepare tax returns for the business and, depending on the type of entity, the tax returns for the owner(s), partners, or shareholders. The IRS requires proper books for a business.
Experts versus Amateurs - Quickbooks Bookkeeping
When the average person looks at the financial statements of a business, they usually go straight to the Income Statement, or Profit & Loss Statement (P&L), or the Statement of Cash Flows. Both are important in evaluating a company's financial health, if there are no bookkeeping errors.
When someone presents us with financial statements, the first thing we look at is the Balance Sheet.
The reason that we look first at the Balance Sheet is because if there are negative assets (other than accumulated depreciation or amortization) or negative liabilities, then we have no choice but to assume that the entire bookkeeping effort is in error.
That means not only is the Balance Sheet incorrect, but the P&L and the Statement of Cash Flows are also incorrect.
Small Business Quickbooks Bookkeeping Mistakes
Why? The answer is simple. A negative Balance Sheet asset or liability is basically impossible. Think about it.
A bank will not allow you, not for long anyway, to have negative cash. If you do temporarily have negative cash in Quickbooks but not in your bank balance, then what you really have is a liability (a NSF check or a check you are holding in your desk drawer & have not mailed), not a negative asset. Your assets & liabilities are understated.
If you have negative Accounts Receivable on the Balance Sheet, then you have received a payment for which you did not enter an invoice and you posted the payment to Accounts Receivable. Since Quickbooks increases income whenever you enter an invoice, that means that your Income & Accounts Receivable are both understated.
If you have negative Fixed Assets on the Balance Sheet, then you have either over depreciated or over amortized an asset, or you sold an asset but did not reduce the accumulated depreciation or amortization on that asset. Your expenses are overstated & Assets are understated. If you sold an asset and did not adjust for depreciation or amortization, then your income on the sale is understated (since depreciation or amortization recapture reduces your cost basis) & assets are understated since accumulated depreciation & amortization have not been reduced.
If you have a negative Accounts Payable on the Balance Sheet, then you have entered a payment for which you did not first enter a payables invoice and then you posted the payment to Accounts Payable. So you reduced accounts payable for a payable that was never posted. Expenses & Accounts Payable are understated.
Take the time right now to look at your current Balance Sheet.
If you see a negative amount (other than accumulated depreciation & amortization, retained earnings, or your capital account), then your books are not correct.
Choose any asset or liability account & you generally cannot have a negative asset or liability. If you do, your books are in error. Time to find a better Quickbooks bookkeeper.
Doing Your Own Bookkeeping May Be A Bad Idea
Quickbooks & other programs are designed to make keeping the books manageable & less time consuming. However, if the user does not understand accounting basics, then keeping the books on your own can easily become a major problem.
Quickbooks handles almost all of the unseen (by the user) half of double-entry bookkeeping transactions. If you do not understand what Quickbooks is doing, then you can be setting yourself up for a bookkeeping nightmare.
The reason Quickbooks nightmares happen is because the owner/bookkeeper does not understand double-entry bookkeeping, debits & credits, and accrual basis versus cash basis accounting.
A business owner can create a costly bookkeeping problem without even realizing it. Until it's too late.
Some people get it.
If you don't, then hire a professional. Even if it's not us.
If you want the peace of mind & confidence that comes with having your Quickbooks bookkeeping, professional financials, and business tax returns done correctly on a timely basis, then Contact Peoria CPAs James Howe or Renee Kolodziej.
Step up to true...professionally prepared Quickbooks Bookkeeping, professional financials & tax returns reasonably priced.