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A Simple Bookkeeping System
By Carol Topp, CPA
Small business owners need a simple bookkeeping method. The system described here uses single entry bookkeeping, not double entry bookkeeping that is taught to accountants. Record keeping can be done quite simply on paper or in a spreadsheet program on a computer.
1. Divide a sheet of paper into columns (office supply stores sell columnar pads), use graph paper or create a spreadsheet on the computer. Label the columns Date, Check Number, Description and Income and leave several columns for expenses. Record every transaction, whether from the checking account, credit card or cash.
2. Label each page with the current month. If using a spreadsheet, use a different tab for each month. Record income in one column and expenses in several other columns.
3. At the end of every month, total the Income and Expense columns. Carry the totals to a summary sheet like the one shown above. The example spreadsheet has columns for purchases of inventory and mileage. Total those columns and carry them onto the summary sheet also.
This summary spreadsheet monitors the business performance every month. A quick glance reveals the major expenses and whether there is a profit, a loss, or break even. This summary spreadsheet also makes tax preparation easy since all the expenses are in categories and summed.
This summary spreadsheet has several uses. It displays the business performance every month. A quick glance reveals the major expenses and whether there is a profit, a loss, or break even. It is also useful for tax preparation since the expenses are in categories and already summed.
Author
Carol Topp, CPA (www.CarolToppCPA.com) consults with small business start-ups, work-at-home moms, and teenagers launching micro businesses. Visit her website for articles, links and ebooks on starting a small business.
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