The ABC’s of Bookkeeping & Business

When it comes to running a business and maintaining your bookkeeping, there is certain lingo to know and words you’ll come to live by. We put together an ABC’s of lingo you must know and keep in mind while navigating your business and your bookkeeping 

Accounts Payable/Receivable: A/P is the money a business owes to vendors and is recorded as a liability. A/R refers to the money owed to a business for its goods/service by vendors or customers, and is recorded as an asset. 

Balance Sheet: An important financial report that summarizes a business’ assets, liabilities, and equities. 

Cash Flow: The movement of cash in and out of your business at a specific time. It’s important to be aware of how often money is moved and the source. A Cash Flow Statement provides a detailed summary of a business’ cash flow during a set period of time. 

Double-Entry Bookkeeping: The most common method of bookkeeping that the majority of businesses use. This is a two-sided accounting method that logs debits and credits accordingly. 

Expenses: This refers to the money spent on something for your business. Each and every expense should be recorded as it takes place for accurate and up-to-date books. 

Financial Reports: A detailed summary highlighting specific financial areas of a business during a set period of time or overall. Some examples include a Balance Sheet, Income Statement, and Cash Flow Statement. These will be beneficial when it comes to planning for the future, reviewing the present, and looking back on the past finances of your business. 

Grace: Keep in mind that mistakes happen, there are obstacles to overcome, fires to put out, and through it all, do your best to conquer it all with poise and ease. 

Heart: Run your business (and your bookkeeping) with heart! This is your passion, come in everyday ready to make it happen - no matter what “it” might be. 

Income Statement: Also known as a Profit and alias Statement. This is another important financial report that summarizes the costs, expenses, and revenue during a set period of time. 

Journal: This refers to the act of logging the expenses and income of your business - a.k.a. your bookkeeping. Each entry should be detailed and accurate, logged in a timely manner for future use. 

Knowledge: Do your research, talk to professionals, do tutorials, invest time in getting to know your business and your bookkeeping inside and out. 

Ledger: Similar to a journal, this refers to the bookkeeping for a business. Whatever you choose to call it, bookkeeping is the backbone of your business. 

Motivation: The drive to reach your goals and continue to work day after day. This is a must! 

Net Profit: The actual profit a business makes after deducting operating expenses, interest, and tax expenses. If the number is negative, this is referred to as “net loss” rather than net profit. 

Overhead Cost: This refers to the ongoing costs of running a business. This includes things like rent, utilities, insurance,and supplies. This does not include operating costs like labor or labor. 

Payroll: This includes the wages and salaries paid to employees for their work. 

QuickBooks: The #1 accounting software for small businesses and the software Skynar Bookkeeping Services to set up, clean up, and keep up with clients’ books. 

Reconcile: The process of comparing your bank statements with your credit card statements and other expense documentation. This should happen on a monthly basis, if not weekly. Reconciliation is beneficial in maintaining accurate, complete bookkeeping. 

Shortcuts: Many software programs have keyboard shortcuts to make the user experience more efficient. QuickBooks has their own set of shortcuts that we recommended using. 

Taxes: Stay on top of all the taxes your business must pay to stay out of trouble with the government. Do your research to make sure you’re knowledgeable on which taxes will affect your business and reach out to a professional for questions or concerns. 

Undeposited Funds: It’s simply that - money in a holding account from a customer/client/vendor that has not been deposited yet. There is a way to record this accordingly in your books. 

Variable Cost: This refers to the amount of a good/service that can change based on the quantity produced. 

Write-Off: Sometimes you won’t receive the money that is owed to you from clients/vendors. A write-off is the elimination of the money owed as they’re deemed uncollectible. 

X-treme: Sometimes running a business will seem like an x-treme sport and it will be x-tremely hard. 

Year-end: This is an important metric for businesses. At year-end, your finances need to be neatly tied in a bow. 

Zest: Running your business and maintaining your bookkeeping with excitement and energy will help motivate your team and increase morale.