Bookkeeping from Home
Wikipedia has a wonderfully simple definition of Bookkeeping. Here it is:-
“Bookkeeping is the recording of financial transactions. Transactions include sales, purchases, income, and payments by an individual or organization.”
That’s all bookkeeping is. It really is that simple. You just need to keep a record of money coming in and money going out of your business. At the end of the financial year you pass on the information to your accountant and he will do his bit. Of course, it also means that during the year you have a pretty good idea of how your business is going financially.
So where do I start?
If you haven’t already done so, you should open a business bank account. I’ve written a post on that very subject. If you want to check it out, just click on opening a business bank account. All your business’s monetary transactions should go through this business bank account and at the end of each month you’ll receive a statement of transactions. You will need to refer to this statement to do your bookkeeping.
Money In – Money Out
There are plenty of software programs available to help you do your bookkeeping from home and whilst these are a viable option, bookkeeping from home can be as simple as buying yourself a record book from your local stationery store or newsagents. That’s what I do. I use an 18 Money Column Record Book, but you can also get 9 column, 12 column, etc. I use mine as follows:-
The left side pages have columns as follows:-
- 1 Small column for the date
- 1 Larger column for writing particulars of transaction
- 7 small columns – to record money in
The right side pages have columns as follows:-
- 11 small columns – to record money out
Putting Headings on the Columns
This will depend upon the type of home business you are running, but the first 2 columns are straight forward. The first one is headed “Date” – the second one is headed “Particulars.”
The money in columns (on the left page) could be headed as follows:-
- Loan to Business
- Internet Sales
- Retail Sales
- Personal Sales
- Commissions Received
- Other
The money out columns (on the right page) could be headed as follows:-
- Bank Account Fees
- Telephone Expenses
- Internet Expenses
- Stock
- Car/Petrol
- Stationery
- Advertising
- Other
You don’t have to use all the columns, but I find I need more column headings for money out – that’s why I put money out on the right hand side, where there are more columns.
Recording Transactions
Once your columns are headed up, it’s just a matter of recording each transaction from your bank statement. For example:-
- Under “Date” – 1 July ’09
- Under “Particulars” – Phone expenses
- Under “Telephone Expenses” – $89.56
I’m sure you get the idea.
When you get to the bottom of the page, add up the columns and transfer each column amount to the next page. In bookkeeping they call this c/f (carried forward) and b/f (brought forward). So, next time you see c/f or b/f you’ll know what they mean, and you can start using them yourself in your own bookkeeping from home.
Quarterly Results
I like to do my bookkeeping in quarters. In other words, I log the first 3 months of the financial year and work out total Money In and total Money Out. That gives me my End 1st Quarter results. I then do the same for the next 3 months, then the next, then the next. I find this useful to compare different times of the year and keep track of what’s happening right now, rather than 6 or 9 months ago.
And Finally
Remember, my system is just one of many. You can follow my system or come up with a better one of your own. In either case, I hope you’ve been inspired to do your own bookkeeping from home. Let me know how you get on.
Leave a Comment December 22, 2009
