Accounting And Bookkeeping For A Private Label Business
When it comes to accounting and bookkeeping, there is a lot to know. For starters, you should know what each of these is and what they do for your business. Continue reading to learn more about accounting and bookkeeping for a private label business.
Accounting is recording, analyzing, interpreting and presenting financial information. It can be done by one person for a smaller company, however, in larger organizations, it can be done by a team of accountants.
The main function of accounting is to prepare a record of the business’s financial affairs. Accounting also includes interpreting the numbers that are prepared and provided by a bookkeeper. These numbers are then used to determine the financial health of the company.
Bookkeeping is the process of recording a business’s financial transactions. It is also organizing these transactions. It is crucial to do this because it is one of the best ways a business owner can figure out if their business is making a profit. This is similar to accounting, however, bookkeeping lays the foundation for accounting, and accounting analyzes the data that is collected from the bookkeeper.
These accounts are not the same account as you would have at a bank. Bussiness.org states that a bookkeeping account is a record of all the financial transactions of a certain type. These include:
- Cash: All business transactions pass through an account like this. Some businesses will even have 2 accounts. One for cash receipts and one for disbursements.
- Accounts Receivable: If you sell products and/or services and you do not collect payment immediately, you must track the accounts receivable. This is money due from customers and keeping it up to date.
- Inventory: This account is all of the products that you have on your shelf. You should make sure that this is up to date and is periodically checked by counting by hand.
- Accounts Payable: An account like this can help you keep track of all the money that you owe to other people. It is critical to watch closely so you pay your bills on time and don’t pay someone twice.
- Sales: This is where you track all revenue that is incoming from what you sell. Keeping track of this can help you know where your business stands.
- Purchases: This account is simple. You track anything that you purchase such as raw material that you buy for your business.
- Payroll: Keeping this account up to date and accurate is important for meeting government requirements.
It is important to remember that the bookkeeping accounts for your business will not look exactly the same as another business down the street. That is fine as your business is your own.
You may even have other accounts for other things too. This includes loans for equipment or furniture in your office. You need to track this information too.
When it comes down to the basics of accounting and bookkeeping, all you need to remember is to keep track of all the money that comes in and goes out. One thing that you can do is hire an accountant or bookkeeper from an outside source to manage all of your expenses.
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