Keeping Track of Your Business

Keeping track of your business is no different in Japan and QuickBooks is pretty popular here just like in the US. The best part of traveling is I found this site, which offers online QuickBooks training videos that I can watch overseas. Accounting is keeping track of all the monetary details of your busi­ness. All the money you have, spend, receive, or owe can be divided into six main categories. Money you have or are owed falls into categories called income, current assets, fixed assets, or equity; money you spend or owe is divided into categories called expenses or liabilities.

If accounting was just a matter of assigning all of your trans­actions to one of these six categories, of course, your ten-year-old could handle it for you. But it’s not that simple, which is why most people use computers to take care of it. Within each of these six cat­egories are dozens of subcategories that specifically describe each of your transactions. An accounting program makes it much easier to set up all those subcategories and make sure every one of your finan­cial details gets assigned to the right one.

Every time you pay an employee, close a sale, or make a bank deposit or a loan payment, that’s a detail that has to be recorded. For example, you have to track telephone expenses as such within the expenses category, or else you’ll have no idea how much you’re spending on phone bills. And you have to track sales taxes as such within the liabilities category, or else you won’t know how much to send the state government each month or each quarter.

It’s as if each category is a file drawer and each subcategory is a folder inside one of those drawers. Whenever you write a check, spend money, lick a stamp, or make a phone call, a record for each of these expenses needs to be put into the proper folder inside your expenses drawer. Each time you sell a widget, fill a tooth, or install a bathtub, you receive money for this, and a record needs to be put in the proper folder in your income drawer. If you borrow money through a mortgage or a small business loan, or if you collect sales tax from customers, you must file a record in the right folder in your liabilities drawer. And if you borrow cash or buy property, the mar­ket value of the property or cash is added to a folder in one of your assets drawers. As you make payments to your mortgage company, you reduce the amount owed in the mortgage record in the liabili­ties drawer, and you increase the value of the building in the fixed assets drawer.

All this sorting and tracking is a pain, which is why there’s such a robust market for computerized accounting programs. They help you with all aspects of your accounting in several ways:

• They organize every transaction in the proper folder in the proper drawer. In an accounting system, these categories are called a chart of accounts.

• They capture this information by allowing you to handle the transactions or activities related to your accounting, such as writing checks, making deposits, decreasing a liability, or increasing the value of an asset.

• They make the information you collect and categorize readily available in reports for your tax collector, your investors, your accountant, or yourself.

Most accounting programs, including QuickBooks, are organized by these three basic aspects of accounting: a chart of accounts, activities, and reports. QuickBooks is no different. But before we get into QuickBooks’ way of handling these basic accounting chores, we recommend checking out these some QuickBooks training videos.