12 Simple Steps to Get Started with Your Bookkeeping | Michelle Cornish | Skillshare

12 Simple Steps to Get Started with Your Bookkeeping

Michelle Cornish, Author & Illustrator - Former Accountant

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17 Lessons (25m)
    • 1. Introduction to 12 Simple Steps to Get Started with Your Bookkeeping

      0:26
    • 2. Step 1 Assess Your Needs

      0:47
    • 3. Step 2 Separate Business Account

      1:06
    • 4. Step 3 Research Your Options

      2:09
    • 5. Accounting App Cheat Sheet

      5:50
    • 6. Step 4 Learn the Software

      1:19
    • 7. Step 5 Enter Business Details

      1:10
    • 8. Step 6 Enter Contacts

      0:40
    • 9. Step 7 Determine Account Set Up

      1:17
    • 10. Step 8 Enter Opening Balances

      1:21
    • 11. Step 9 Understand Tax Deductions You Can Claim

      1:05
    • 12. Step 10 Record Income and Expenses Regularly

      1:00
    • 13. Step 11 Keep Your Documentation

      1:22
    • 14. Step 12 Always Reconcile Accounts

      2:08
    • 15. Conclusion

      0:43
    • 16. Your Project

      1:03
    • 17. Resources

      1:04

About This Class

Does the thought of getting started on your bookkeeping overwhelm you?

You're not alone.

In this 25 minute class, you will learn 12 simple steps to get started with your bookkeeping and feel confident.

Some of the key points discussed are:

  • how to choose the best bookkeeping program for you,
  • what information you need to record,
  • how often you should do you bookkeeping,
  • why it's important to keep your records up to date, and more!

This class includes a PDF summary of the 12 steps discussed as well as an accounting app feature sheet you can refer to when the class is over.

Transcripts

1. Introduction to 12 Simple Steps to Get Started with Your Bookkeeping: Hello and welcome to 12 simple steps to get started with your bookkeeping. I'm Michelle, coronation author and illustrator and former c p. A. With almost 20 years experience in the public accounting industry. But keeping is one of those things that most people really dislike doing. But I want to show you how it's really easy to get started and why you should. It's super important for the health of your business, so let's get started. 2. Step 1 Assess Your Needs: so Step number one to getting started with your bookkeeping is assessing your needs. So I want you to think about what you want your bookkeeping program to do for you. Do you want to be able to invoice customers so that you can track Who has paid you? That is a super important feature that you will want to consider. Do you want to be able to download transactions directly from your business bank account that can save you a lot of time? If you sell physical products, you might want to consider a program that contract inventory for you. Some programs also offer a handy feature where you can snap a picture of your receipt with your phone and it instantly goes into the program. So think about all these features. You could even google some if you like, and make a note of the ones that are the most important to you. 3. Step 2 Separate Business Account: step Number two is opening a separate business bank account, and if you use credit cards in your business, you'll also want to have a separate credit card for your business. Having a separate bank account for your business is really important because, first of all, it makes it really easy to do your bookkeeping. If all the transactions going through the bank account our business, then it's really easy to categorize. If you intermingle personal and business transactions, it will take you extra time to sort this out during the business or during the bookkeeping process. And it also makes it more difficult if you ever get audited by the government. The other advantage to having a separate business bank account is that you will have a bank account in the business name, which is really important when people are paying you so often a banquet that you deposited . Check if it is written to your business name. They won't let you deposit it in your personal bank account because the names don't match. So you want to make sure you open a bank account that is under the business name and depending where you are located. You may also be required to register that business name 4. Step 3 Research Your Options: the next step in getting started with your bookkeeping is researching your options. So I want you to look back at step one. Were you identified all the features that you want your bookkeeping system to have? So there are systems that you can install on your desktop. There are systems that operate in the cloud. The cloud is really just a fancy way of saying online, so it's You log into the program and it is backed up somewhere else on an external server. These air nice because then you don't have to remember to do a local backup. You still can for that extra security, but they will be backed up by your provider as well. So here's where you're going to figure out which APs or programs have the features that you're looking for that you identified and stop one. So the programs and APS that I recommend our wave. It's a free app. It's pretty easy to use. It is missing some time saving features, so I recommend wave for people that maybe have 20 transactions or less per month. Once you get more transactions in that, I recommend a program like Quick Picks Online or zero, which is about X e r 00 has some super time saving features that you couldn't get your bookkeeping done really quickly. Which is nice. QuickBooks online has a built in payroll feature. So if you have Carol in your business, you might want to consider QuickBooks online. So zero and QuickBooks online are both paid their around $35 a month. They're heading on the option that you go with. You also want to check with your accountant. So some accountants, if they know the software that you're using, that can help you if you get stuck. So if you're not sure how to record something, you confront up your accountant and ask them how to do it. So you might want to consider using a program that they are familiar with. And I know there are some accounting offices that don't like certain programs, so they might. I prefer that you use something else When you're finished researching your suffer options, make a list of your top choices and make sure that they have all the features that you noted in step one 5. Accounting App Cheat Sheet: you can find this features sheet in the resources section, which you will find in the project area. There is a PDF comparison of bookkeeping software and APS eso It might be a little hard to read on the screen, but you can grab the pdf and print that off if you wanted to follow along. So this is a comparison of the five most popular software and accounting app. So I have used and have personal experience with, and I wanted to do a quick summary for you so you can get a feel for the pros and cons and see if any of these APS that might be the ones that you would like to consider to use in your business. So Sage, 50 used to be called simply accounting, and it used to be a pretty standard accounting app that most people used in their business . So it's good if you're going to be working with an accountant who uses the program. It is a true double entry system, so it's good for learning at the double entry system, and it's very comprehensive. You can do payroll on it as well as inventory and track your projects so it's very good in that regards. It can be a little bit cumbersome. It does take up a lot of space on the computer, so sometimes it doesn't run as quickly, depending what else you have on your computer. So it is a desktop program. They do have a sage 50 cloud at, but I don't have any personal experience with that, so I can't say whether or not that is good. I'm sure it would be a similar double entry system, but based in the cloud rather than on the desktop. Um, and the other thing to keep in mind with Sage 50 is if you use a Mac. It doesn't work as well with Max as with PCs. So I think Sage 50 is best for people who want to learn the double entry bookkeeping system . And if you are going to be working with accountant who requires you to use Sage 50 so fresh books is, ah, very popular app as well. The um, version that I've used is single entry only, so that means that it's good for keeping track of your income and expenses. But if you want to have a proper balance sheet, which, if you're applying for any financing, most places they're going to require that proper balance sheet accounting offices require that balance sheet, so you cannot create that with fresh books. With a single entry accounting system, you cannot create a proper balance sheet, so you do need a double entry system. Fresh books is very user, user friendly and simple to use, so I recommend it for people who just want an invoicing option or maybe who don't have a separate business bank account, which is something that I don't recommend. I do recommend that you get a separate business bank account and use a double entry system . Wave is a free accounting out unless you want to use payroll or be able to processed credit cards, then they will charge you a fee for that. But it is quite reasonable. They have really great email support if you need help using the program and you can find videos easily on YouTube that show you how to use wave and how to do things in the program if you have a large amount of transactions, so if you're quite busy or your very large company, it can be time consuming the program is not really streamlined for people who have a lot of transaction. So it's good if you have maybe 25 or less transactions per months going through your business bank and credit card statements. It's also confusing to do transfers between account. So if you have more than one business bank account or if you have a business bank account and a business credit card, the transfers between those two are a bit confusing the way they are set up in weight. So I recommend this program for small businesses on a tight budget because it is a free brown doing payroll or processing great both of them and also best. If you have a little volume of transactions quick, what's online is a really good program. It is completely different from the desktop version of QuickBooks, though, So if you're used to the desktop version of QuickBooks, there will be a little bit of a learning curve for you in using QuickBooks online. It includes payroll and invent tracking inventory tracking in the program already for the seam flat monthly fee and is very user friendly. Support is quite good, but there is sometimes a long wait. They may have improved this since I use the program, but there was often a long wait on the telephone when I needed to call support. In this programme, I recommend for businesses who require payroll and don't want to pay extra fees to get payroll on their accounting system. Zero is a really good system as well. It is fully integrated with many other app. So if there are other app studio you were using to, for example, track your time or for payroll, you can integrate those with zero. But zero does not come in. Come with its own built in peril function or inventory track, and you do have to use additional APS for those so there may be additional fees incurred in doing that. There is an excellent training library with videos that includes how to do things, and support is very good, and it was always very fast. When I used it, it was email support. Ah, so I recommend this program for anyone who wants to save time. So there are some features in zero that make it really great for people who have a large amount of transactions every month, their cash coding system is a really great way that you can save time on your bookkeeping every month. So there you go. Those are my top five choices for accounting and suffer abs. If you have any questions about those, please share in the discussion area and I will get back to you as soon as I can. 6. Step 4 Learn the Software: So once you've decided on a software program or app, it's time toe. Learn how to use it. So YouTube is really great for this. You can search for many accounting APS and programmes on YouTube and learn how to do certain things. If you have a knowledge of double entry bookkeeping, this will help you to understand the program a little bit more, but it's definitely not necessary. And if you're worried about it, you can even Google double entry bookkeeping and watch a quick tutorial on that as well. A lot of the accounting APS also provide their own training, so they have free video libraries that show you how to get started and get set up. Zero has an awesome library. They have tons of videos showing you how to do almost anything you can think of in the program. And many other applications have similar training as well, so you can always contact your representative or email the APP and find out if they have any recommended training resources that you can use. Most accounting abs have really great support, either by email or phone on, and also documents that you can access and learn how to do things as well, but that you want to make sure you get familiar with the program a little bit before you get in there and start entering your transactions. 7. Step 5 Enter Business Details: Okay, so step number five in getting started with your bookkeeping is entering your business details. So this is usually the first page of the app will take you to once you log into the program . So you want to enter your business details the way you want them to appear on your invoices . So most accounting APS are going to take the information that you enter under the business contacts section and put that on your invoices. So that's why you want to record it. However it appears. Or however you want it to appear on your invoices, make sure that you enter whatever business name you are operating under. So if you are incorporated and for example, you are numbered company, but you operate under a different name. Make sure you used the abbreviation o slash a for operating as and then the common name that you operate under. Or you could also used abbreviation D B A, which means doing business as so, including both your legal name, which would be what you are incorporated under as well as the common name that you do business as makes it very clear to the public who they're doing business with 8. Step 6 Enter Contacts: Okay, So for step number six, you want to enter your contacts, so this can be your customers and also your suppliers, so it makes it really convenient. Toe. Have a list of your suppliers and contacts right in your bookkeeping program for easy access. When you have your customers listed, it makes it easy for you to track who is your best customer. So you can take a look and sort your transactions by customer and see who is a frequent buyer who is purchasing the most from you and for the suppliers. It just makes it easy for you to categorise your expenses when you're recording your transactions later. 9. Step 7 Determine Account Set Up: for step number seven, you're going to determine your account set up so most bookkeeping APS or software will come with a preloaded template, depending on the type of business. So when you go into the program to set up your account, is gonna ask you what type of business you have and you can select the one that is closest to your business. So for a service based professional, for example, there might be an option that says professional or service business. And you can select that, and it will be pre filled with the different types of accounts that you need. So the accounts are where you Allah coat allocate things when you are in the bookkeeping program. So, for example, if you use your vehicle for work and you buy fuel, you would have an account called fuel, and that's where you would allocate all your fuel expense. One thing I recommend doing is if you have more than one type of revenue in your business, is that you add some more revenue accounts. Most bookkeeping software, or APS, come with only one revenue account, or maybe they will have one for services and one for products But I highly recommend if you have more than one service or more than one product, you have a revenue account for each separate thing that you offer. This makes it really easy for you to track your highest selling products and services. 10. Step 8 Enter Opening Balances: So Step number eight is in putting your opening balances. So if you're just starting your business from scratch and you're starting with your bookkeeping program at the start of your business, you might not have a lot to enter. So maybe you've opened a business bank account and you put in $100 of your own money. So the only entry that you're gonna have for the opening balances $100 in your business bank account and then ah, $100 out of owners contribution. So you will haven't owner's account in your book. Keeping the bank is going to be a debit of $100 so positive amount, and then your owner's account will have a credit of $100 for the amount that you contributed personally to your business. Now, where it's really important to enter your opening account balances is when you're switching from a different software or system of keeping your book. So if you've been using a spreadsheet and it's part way through your business here, you want to make sure that all those opening balances transfer over to the new program that you're using so that you don't end up with mistakes when you come to do your taxes. So you're gonna make sure that you, at the date that you transferred to the new system, you're going to look at your balances in all your accounts and make sure that those balances are inputted into the new program. 11. Step 9 Understand Tax Deductions You Can Claim: step. Number nine is a really important if you want to save tax, which is pretty much everybody. So you want to make sure that you understand what expenses you can claim against your business income. An easy way to remember those is that you can clean anything that helps you to earn business income so you can claim training courses that you take. If you go to conferences, you can claim the expenses related to that. You can claim your office supplies if you use your vehicle for work. You can claim a portion of that, and if you work from home, you can claim a portion of your home as home office expenses. Now there are some caveats on these expenses. And, of course, with anything related to tax, there's always rules as to when you can and can't claim things. So if you're not sure, make sure you check with her professional accountants so they can help you out and save you some time during tax season. So knowing what deductions you can claim and what expenses are business expenses for you will really help save me some time during taxis 12. Step 10 Record Income and Expenses Regularly: so that now that you know what expenses you can claim against your business income, you're ready to start recording your income and expenses. So if you're using your accounting or bookkeeping app as an invoicing tool as well, the invoices will automatically be in your program already, so you don't have to re record those. You just want to make sure that you do record when people pay, which is really important. Um, so you want to get into the habit of regularly recording your income and expenses so that it doesn't become a big shore. If you let it go for a few months, it's gonna take you a lot longer than if you're doing it every two weeks. So every two weeks is what I usually recommend, but you can do it once a month. If that is easier for you to remember, you want to pick something that is going to make it fun for you and not a chore. And if it helps reward yourself for recording your income and expenses, then definitely do that. It's a really good habit to get into, and you will thank yourself when it comes time to do your taxes 13. Step 11 Keep Your Documentation: Okay, So for step number 11 once you've recorded your income and expenses, I want you to make sure you keep your documentation. Your documentation can be digital or paper based. Just make sure that wherever you are located, whatever country you're in, that your tax authority accepts digital copies. So Canada and the U. S. I know for sure do, except digital copies. If you're in a different country, just make sure you double check on that. You want to keep your documentation because it is up to the taxpayer to prove that they are eligible to claim an expense on their taxes. So make sure you have your backup and you keep it in a safe place so that if you ever get audited, you can prove that deduction. A good rule of thumb is to keep your back up for seven years after the date that you filed your tax return. Some countries are six. You want to just check with your professional accountant or the local tax authority, and they can let you know how long to wait before destroying any records. If you do file any special tax elections, you want to make sure that you keep those forever. So sometimes the government does not keep copies of these things, and again, it's up to you to prove that you are eligible to claim it. So you will know if it's a special tax election, because your accountant will tell you, and it's usually forms that are separate from the regular tax return. 14. Step 12 Always Reconcile Accounts: So my final step for getting started with your bookkeeping is toe. Always reconcile your accounts. So whatever you have decided on for the regular period for recording your income expenses if it's every two weeks or every month, make sure that at the end of a session, when you finish recording everything, you reconcile your account. So what does this mean? Here's an example. You have your bookkeeping app and you've gone through all your transactions. Now you want to go to the account where the bank transactions are recorded and look at the balance. Now go to your actual bank account on lines you couldn't. Or if you have a printed statement, you can look at that. Make sure you're comparing the same date. You want to make sure that those numbers agree. And if they don't agree, make sure that you know by So this is exactly like balancing a checkbook. So sometimes the numbers won't agree because you've written a check. But it hasn't gone through the bank yet, so you could just make a note of yourself by writing down the bank statement balance per what the bank says, and then deducting the outstanding check And then that balance should agree to what you are showing in your book keeping records. Sometimes you can also have deposits that have gone through your bookkeeping program, but they have not cleared your bank yet or vice versa. So you just want to make sure that everything agrees from your bank statement, according to the bank, to what it's showing in your county or keeping the software. Another account that you want to reconcile often is your accounts receivable. So accounts receivable is what your customers Oh, you make sure that at the end of a bookkeeping session, you go to your accounts receivable list and see who still owes you money. Make sure that you agree with what your program is showing. Sometimes there will be customers on that list who have actually paid you. Maybe they paid you in cash, and instead of depositing it in your business bank account, you just put it in your wallet or your pocket. You want to make sure that you noted that that customers still paid you so that you don't send them a statement saying that they still owe you money 15. Conclusion: I hope you enjoyed 12 simple steps to get started with your bookkeeping. I know bookkeeping can be confusing, and it's not always easy. But don't be afraid to reach out to your local professional accountant. They're more than happy to help you. And if they're going to be doing your taxes at tax time, it will actually help them as well. So they will get more familiar with your business. And it will save you time when it comes time to do your taxes. So I have provided a handout that summarizes thes steps and gives you a little bit more information. Make it fun, develop a routine and get into the habit of doing your books on a regular basis. I guarantee when tax season comes around, you will be happy that you did. Thanks for watching. 16. Your Project: This is the class handout for us. 12 simple steps to get started with your book keeping the handout summarises each step covered in the class. So as you'll see it is the exact same information that was covered on the videos. But in written form for your project, I would like you to go through each item, so go through each step one through 12 and then figure out which accounting app you are going to use for your business and share it in the project section. So if you're having any trouble with any of the steps, please posed in the discussion area and we can all help each other out, you will find this handout in the Projects section under the resources area. I believe it's to the right under the project section. Okay, so just a quick review go through each of these steps one through 12 in the handout. As for your project, and let me know which accounting app you've decided to use and how it's going getting that set up All right. Thanks again for taking the class 17. Resources: I wanted to quickly go over the resources included with this class as well as some additional resources you might find helpful when setting up your bookkeeping. So included with this class is the pdf 12 steps to setting up ineffective bookkeeping system, and you will find that in the project section under resources. Also here on skill share, you will find other classes that I have created bookkeeping boot camp, which is all about determining your eligible business expenses as well as accounting for creatives, which has a little bit extra information for those of you that have any type of creative business. I have a book called Keep More Money that you can find on Amazon, and this book is designed to help you find an accountant. So it has, ah lot of questions that you can ask when interviewing accountants. And then I also have the accompanying workbook to that book, which is free on my website, and you can find it at the address here on the screen again. If you have any questions, please post them in the discussion area