Bookkeeping

The activity of recording business income and expenses with the purpose of arriving at a fancy thing called a profit.

Why do we need to know what our profit is? Well that is the number the tax man needs to take their cut called tax.

(Hold your breath) bookkeeping also involves accounting for assets, writing off depreciation and accurately reflecting equity and liabilities (that’s where I come in).

Bank Account Transactions

Everything that happens in your business bank account (yes, you should have a business bank account and move away from your personal account if you haven’t done so already) must now be accounted for.

The money received from clients gets matched to the invoices you issued to them.

The money you paid to suppliers gets matched against the bills you loaded for purchases you’ve made.

All other transactions that went out your bank account gets reconciled to their respective categories (called ledger accounts) for instance bank charges and interest received.

This is done by connecting your bank to your accounting platform which pulls your bank transactions in automatically, ready to be reconciled. Or it means manually converting your bank statement to a format that can be uploaded to your platform should you wish not to connect your bank account directly.

Client Quotes

A quote is the document you send your client with your proposed fees and estimations of all the prices involved in providing them with a service.

A quote can then be accepted or declined by a client.

The potential revenue within your quote does not affect your financials yet, meaning it is not recorded as income until such time as it is accepted and converted into an invoice, then only it is officially revenue in your business’s books.

Bank Reconciliation

Once all your bank account’s transactions have been categorised, we compare your actual bank balance to that of what is shown in your accounting platform to ensure they match.

If they match it serves as confirmation that you have not missed a transaction or accounted for anything more than once.

If it does not match that means there is a mistake somewhere and each transaction since your bank account last matched, is scrutinised to find the error.

Client Invoices

Once a quote has been accepted by a client, it needs to be converted to an invoice. An invoice is a final reflection of what your client owes you for the agreed upon product or service.

Accepted quotes must always be converted to an invoice, this is the only way that the revenue is officially accounted for in your books.

Be sure to file all the invoices you send to clients in a space where you can access it at all times, think Google Drive or Dropbox.

Update & Reconciling of your Accounts

This relates to everything that has been mentioned, creating customer invoices in your platform if you are doing them manually somewhere else; bringing in your supplier invoices; importing and reconciling your bank account; doing a bank reconciliation; running depreciation on all of your assets; providing for expenses that have accrued but not yet paid and any other month end or year end close off journals.

Supplier Invoices

When you purchase anything for your business, the person or business you purchased something from must give you their invoice.

This invoice can then be loaded onto your accounting platform where you record what the purchase was for.

Modern accounting platforms allow you to also upload this invoice that you received from your supplier to ensure you have an easy way of accessing it should you ever need to refer back to it. Be sure to also save a copy in a folder that you own should you ever decide to close down your online accounting platform.

Financial Performance Report

This is a look at all the reports once all the processing within your platform is completed.

We look at your income statement (or otherwise known as profit and loss) to see what income and expenses you’ve had as well as what profit you’ve made and based on that how much you should be saving for tax.

We look at your balance sheet to have an overall look at the value of your assets (equipment, properties, motor vehicles and other assets). Also the value of your liabilities (moneys owed to third parties) and lastly at the value of your equity which in an entrepreneur’s life usually refers to the accumulated profits of the business less the money you’ve drawn out for yourself.