Once your accounting system is set up it is time to track your financial transactions. Keeping track of your businesses financial transactions tells the whole story of your business. There are so many things you can tell by just looking at your business reports. Some of the most important decisions you make regarding your business will come from looking at the reports generated from your books. These decisions can either make or break your company.
Business transactions are recorded in books called a journal or a ledger. In the journal all the transactions are recorded. If you read the article “Analyzing your transactions” I mentioned how I recorded journal entries as a young teen. In a journal you would record every single transaction that occurred and the date it occured. After you record in the journal you then record in the account totals in the ledger.
The ledger is arranged by account and will help you see how your doing based on the balances of your business accounts. The ledger contains the transactions recorded in the journal and resembles the chart of accounts. The ledger paints a picture of all the transactions from the journal.
Good recordkeeping practices should apply for any type of system used. If you use an electronic system to record your finances you can do so using a spreadsheet or an accounting software system like Quickbooks. If you are unsure where to start consult with your local bookkeeper.