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Invoice with bank details example for small businesses

Enough! No more excuses. It's time to tackle bookkeeping once and for all! Join me... James   and Winnie as we share seven simple steps to get  you started. What is bookkeeping? Bookkeeping is   the regular process of recording, sorting and  storing a business's financial transactions   Is it the same as accounting? No. But the two  are related. In my Accounting Basics   video I said that bookkeeping was one of the  many branches of accounting but it's really   the trunk of the accounting tree. Why? Because  accurate record keeping is the foundation to   doing your taxes, building financial statements,  making business decisions and spotting mistakes   Right! It's time for those seven steps. But  before we jump in I want to say a quick   thanks to my wonderful channel members... thanks!  Thanks for your support. Make sure you watch this   one through right to the end because I'm also  going to share two of my top bookkeeping tips   How do you start bookkeeping? Step one. Separate  your business and personal transactions   mixing the two is a recipe for disaster. Why?  Because it's a waste of time. You don't want to   have to pour over all of your bank statements  and pick them apart. Trust me. You can miss tax   deductions and you might be legally required to  keep them separate in any case. So don't dilly   dally. Do it! The easiest way is to open a business  bank account. All of your business's transactions   should go through this new account. Don't use it  for personal transactions and you'll be golden   Step 2. Choose a bookkeeping system. A bookkeeping  system is a methodical way to record transactions   in a safe place. There are a few options... you could  use spreadsheets like Excel and Google Sheets. These   are cheap and relatively easy to use. But they can it be time  consuming to maintain and they can't cope with   complex bookkeeping tasks. Instead you could use  accounting software. QuickBooks, Xero, Freshbooks   Wave and Sage are all popular choices. I'll drop  links to them in the description. These are much   more robust than spreadsheets. You can use them to  automate tasks to save time and reduce errors but   they are more costly and a bit more complicated.  If this all sounds a bit much you can always   outsource your bookkeeping to another company.  This can free up your time to focus on your   main business and you can lean on the expertise of  professional bookkeepers. However it does come at a   price. The key is to find a bookkeeping system that  aligns with your unique needs, budget and expertise   so it's important to do your research before  jumping in. Step 3. Choose between single-entry or   double-entry bookkeeping. Single-entry bookkeeping  only records one accounting entry for each   financial transaction. Usually in a cash account.  It's simple to set up in a spreadsheet which makes   it a convenient choice for new businesses but  it can oversimplify your finances which gives   you an incomplete picture. Double-entry bookkeeping  records at least two opposite accounting entries   for every transaction. Debits and credits  are the words we use to reflect each side   In an ideal world this is how you should do your  bookkeeping. It's widely accepted, more accurate   and gives you a lot more financial data. There's  a reason why all large businesses use double   entry bookkeeping. On the flip side it takes a  lot more effort to set up and maintain so I'd   recommend using accounting software or hiring  a bookkeeper to give you a hand. it helps to   have a basic grasp of accounting. If you'd like  to learn more about that well click subscribe   because you my friend are in the right place. I've  put together a Bookkeeping Basics cheat sheet for   you. It's a quick summary of all seven steps in  this video - the links in the description. Step four Choose between the cash method or the accrual method of bookkeeping. In the cash method you  record revenue and expenses when cash is received   or paid out. It's straightforward and gives you  a good look at your cash flows. That makes it   a popular choice for small business owners who  want to keep things simple. But it can be hard to   accurately measure your profit. In the accrual  method you record revenue as it's earned and   expenses as they are incurred. Regardless of when  cash changes hands. This method matches the revenue   you earn to related expenses which helps you  accurately record your profit. It also gives you a   detailed look at your financial position. But it is  harder to maintain so please consider your needs   before taking the plunge. Now that the setup is  out of the way it's time for step five. Recording   transactions. This is where you enter your business  transactions into your bookkeeping system. You can   do this daily, weekly monthly. Hand them over to  your bookkeeper or record them yourself in your   spreadsheet or accounting software. While you're  at it, make sure you jot down some extra details   The seller or purchaser, the document number, date  description and amount. This information will   help you search through your transactions without  having to keep going back to the original invoices   Make sure you record all of your transactions  in each accounting period and you'll be in   good stead. Step 6. Sorting transactions. When you  record a transaction you also need to file it in   the right accounts. An account is a place where  we group together a set of related transactions   For example, if you make a sale then you  should record the sale in your revenue account   Your complete list of accounts is called a Chart  of Accounts. Sorting transactions into accounts   allows you to make financial statements like the  income statement which summarizes your revenues   and expenses over a period of time and the balance  sheet which gives you a snapshot of your assets,   liabilities and equity. Step 7. Storing transactions. So  you've recorded and sorted a transaction, now you   need to store it and by that I don't just mean  click save. We also need to store the evidence   that supports the transaction. You can pop the  physical invoice into your filing cabinet or take   a digital copy and save it on your computer, in the  cloud or within your accounting software. Having a   well-referenced system for securely storing source  documents will keep your business compliant with   tax and financial reporting requirements and  don't forget to back them up! There you have it   seven steps to kick-start your bookkeeping.  Now all you have to do is repeat steps 5, 6   and 7 over and over and over and over and over  and over again. But don't run off yet! I'm about   to share two bonus bookkeeping tips that'll set  you up for success. Tip one. Make sure you budget   for taxes. Not very jazzy, I know. But you've got  to keep on top of your tax obligations   Check with the tax authorities in your area to find  out which taxes apply to you. Then set aside some   money each month. If it helps, you could open  up another bank account and call it the tax   account. A little bit of planning goes a long way  and you can sleep soundly knowing that you've got   your taxes covered. If in doubt, reach out to a tax  accountant. Tip two. Do regular bank reconciliations   This is an opportunity to double check your  bookkeeping. You compare the transactions on   your bank statements against those recorded  in your bookkeeping system. The goal here is   to get them to agree. I made a video a while ago  explaining how to do a bank reconciliation which   I'll link to in the description. By reconciling  your bank account at the end of every month   you can keep your accounts accurate and up to  date. This is key to successful bookkeeping. If   you found this one helpful then may I direct  you towards my video on accounting basics. In   this one you'll discover the eight steps of the  accounting cycle. It's a goodie! I'll see you there.