As a business owner, you have a lot of balls to keep in the air. You’re managing employees, keeping customers happy, and making sure the products or services you offer are top-notch. Amidst all of that, you also have to stay on top of your finances. One essential way to do that is by categorizing your transactions each month in bookkeeping.
What is Bookkeeping?
Bookkeeping is the process of recording, classifying, and summarizing financial transactions to provide information that is useful in making sound business decisions. The goal of bookkeeping is to record all relevant financial information so that a company’s financial statements can be prepared accurately.
Why Does it Matter?
Categorizing transactions helps you see where your money is going, which can be helpful in making budgeting decisions. It also allows you to track trends over time. For example, if you notice that your office supply expenses have been increasing steadily for the past six months, you may want to look into ways to cut costs.
How do I do it?
The first step is to gather all of your financial documentation for the month – this includes receipts, invoices, bank statements, etc. Once you have everything in one place, you can start categorizing each transaction. Here are some common categories:
– Office Supplies
Once you’ve categorized all of your transactions, you can start putting them into a spreadsheet or accounting software program. This will help you stay organized and make it easier to prepare your financial statements at the end of the year.
Keeping track of your finances can seem like a daunting task, but it’s essential for the health of your business. Categorizing your transactions each month in bookkeeping is one way to stay on top of your finances and make sure your business is on track.