If you are starting your own company you will need to learn the basics of bookkeeping and accountancy. Until you are successful enough to hire someone to do these jobs for you, it will be up to you to keep track of your business’s expenditures and revenues. The two primary reasons you need to do this is because it will increase the likelihood of your making a profit and because you need that kind of financial information for tax purposes. There are many kinds of bookkeeping and accountancy software that can help you in keeping your books. You do not have to be good at math to do this; you just need to be faithful and careful.

The first thing to do is to keep all of your receipts as the legal proof of all financial transactions. Record every transaction on a regular basis. If you have a lot of customers or purchases you will need to update your records on a daily basis. If you don’t have as many then you can do it weekly or bi-weekly. Keep track of both money paid to you and money you have paid to someone else. Then use your software or your calculator to summarize–that is, to report totals: total weekly income, total weekly expenses, total weekly profit, etc. You will also need to use the information from your ledgers to create financial reports. Once again, software can this for you easily. The primary reports you need are a cash flow analysis, a balance sheet, and a profit and loss forecast. These reports help you to understand your overall financial picture. Are you slowly losing money or slowly making it? Can you afford to let your customers pay in installments, or do you need the cash immediately? What does the financial future of your business look like if you continue in your current trend? Bookkeeping and accountancy will tell you all this and more.