When running a businesses it is a must for the business owner to keep all of the business’s receipts. However, as you accumulate more and more receipts, your desk drawer may not cut it any more. Receipts are important to keep track of and represent a financial record which is essential come tax time. Keeping track of all of your business receipts needs to be more organized than pulling them out of your draw when it comes tax season. This is where a general ledger can be a business’s lifesaver. Mark Dicus & Company will share how using a general ledger can help you better keep track of your business’s receipts and other financial activities.
Difference Between General Ledger VS Journal
First it is important as to not confuse a general ledger with a general journal. A general journal is used for a chronological listing of the company’s transactions. A general ledger is a detailed list of the company’s assets, liabilities, equity account and other financial records. A general ledger can help you easily see increases and decreases in these accounts. In a general ledger it should also help make it easier to reclassify amounts and correct any errors in open or closed accounts, especially when it comes to the end of the year.
Purpose of General Ledger
Many business owners often wonder why they need a general ledger. There are many reasons why a general ledger is essential to a business. One of the major reasons is that it provides a 360 degree view of your business’s financial health. A general ledger tracks seasonal changes of the business’s revenues which can help determine if change is needed or better profits are desired. A general ledger also reflects any increase in debts or if the business growth is slowing down. Profit growth can also help you determine if you should make more investments in the business. A general ledger will also track any of the business’s increased expenses which can have a major effect on the business’s future. A business general ledger helps keep track of the business’s financial details. This not only helps you monitor your business throughout the year, it also comes in handy when tax season arrives.
General Ledger Entries
When a business is looking to create a general ledger there are categories and documents that you will want to be able to record to ensure success. When creating your business’s general ledger, make sure it will include:
• Current Assets
• Fixed Assets
• Long Term Liabilities
• Current Liabilities
• Owner Equity Accounts
• Expense Accounts
• Gains and Loses
• Transaction/Receipts
Importance of General Ledger
It is important that once you create your business’s general ledger that you keep it well organized. Keeping your general ledger takes diligence. Make sure to record transactions as they occur and input data of all of the other account and liabilities status at least once a month. When it comes tax time your general ledger will be used as a primary resource and make your taxes more accurate which will help prevent tax error and problems with the IRS. Additionally, you can make better business decisions to ensure the success of your business.
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If you need help starting up a general ledger or other bookkeeping or accounting assistance, contact Mark Dicus & Company today.