What does balancing books mean?

Tips for business owners to understand basics of accounting. As an entrepreneur, you should know your business' financial standing to make smart decisions. Why should you balance your books?

Balancing Books

Balancing the books is an #accounting #term. How do you know what's going on with all your #money? Do you know to the penny how your money is coming in and how it's going out? How much is coming in how much is going out? Well you learn that by balancing the books. This term comes from #balance #sheets where the assets have to balance with the liabilities and equity on an accounting report.

Warren Buffet

“Accounting is the language of business.”

Balancing books also consists of #reconciling all bank accounts such as credit card, checking account, etc. Reconciliation process is to #verify all #records in accounting #system matching accurately with bank statements. By doing so you can avoid all #fees associated with your financial institution such as overdraft fees, paper statement fee, image fee, insufficient funds fee, etc. If you manage your account on a daily, weekly, monthly basis, you would be able to detect any #fraudulent #transactions and you can notify your bank to prevent any further damage from your account.

So how do you #balance the #books? You go through every #record of money at your #bank #statements to see what money has come in. You look at your #check #slips to see what checks have come in to your #business. You also look at your #purchase #receipts to add together everything that you bought. By balancing your books, you have the most accurate view of your #financial #standing so you can make the best decisions possible.

Stay Informed

Balancing your books is the basic of accounting and this concept will help you to understand how the day to day operations of your business get reported and how these transactions generate your financial statements such as Balance Sheet, Income Statement, Cash Flow Statement, etc. Accurate accounting information will allow not only the management but also investors and creditors to make major financial decisions. At VisionGuard, we believe accounting is one of the crucial pillars of your business and we are always ready to serve you and support your vision. Your Vision is Our Mission.