There are some basic accounting principles that every business owner who does not have a professional bookkeeper on their payroll needs to know.
The most important thing to know is that you must keep receipts for every purchase no matter how small. You also must keep an accurate record of all sales that you make in a month. These areas of bookkeeping are important to you because they let you know whether or not you are making a profit, and they are the facts you need to file your monthly sales tax and use paperwork.
Each business has to keep an accurate record of their inventory and the amount of money their inventory is worth. This helps to determine the worth of your business, as well as helps when the first of the year comes around and you have to pay taxes on all the inventory that is left in your business. You need to also know how to determine the amount of depreciation you can claim on items you use in your business. Items like vehicles, tools, office equipment all depreciate at different rates but the amount of depreciation can be deducted from the amount of taxes you owe at the end of the year. Read more…