Find out where your income is coming from and what tax deductions you can claim.
Steps in Bookkeeping:
1. Make sure to separate your personal budget from business expenses. Make sure your funds in both areas aren’t connected to make sure that your IRS know what your business is earning. It is also essential to keep separate accounts in your bank to meet your own personal requirements and the company’s budget.
2. Single entry. Double entry. Double entry is a system of accounting that tracks your income and also where it’s headed. The transactions you make will be noted twice. A place called credit and the other one is debit. It will be possible to determine if the balance of credit and debit is equal in that they’re the same. Single entry tracks transactions when they occur. This is suggested for sole proprietorships or businesses which do not have employees.
3. Cash vs. Accrual Basis. You only receive revenue in cash. Like, for instance, when you transfer your check into your bank account, this is the way you will recognize it. Accrual basis is a basis for recognizing revenue only when earned. This is, for instance, when the project is finished and an invoice is prepared.