When business owners or individuals try to manage their finances, they may feel intimidated or overwhelmed and believe they have to use a professional or certain types of software for the most basic of accounting functions. While it is important to utilize such resources when necessary, it is possible for business owners and individuals to use basic accounting tools to manage their finances.
Record Book or Ledger
You'll need to record all your financial transactions, including purchases, income, expenses and debts that you owe. You can use a monthly bill organizer, a ledger or create one of your own. Books that can be used as record books or ledgers can be found at most stores. Having this information can help you in creating budgets and monthly reports and be important for tax purposes.
It is important to keep receipts and transactions in a file folder or filing cabinet so that information is easily accessible. You may have files for paychecks, important papers and receipts for each bill you pay. Business owners may have files for sales, purchases, vendors, customers and administrative expenses.
A basic calculator is all you need, however, some people like to have a calculator that uses tape so that they can keep it for their records. This can help when balancing your checkbook, reconciling your bank statements, creating a budget or adding up all your income and expenses.
Software packages offer word documents and spreadsheets that can be used to document, copy and transfer information. Examples of application packages that offer these applications are Microsoft Office, which offers Microsoft Word and Microsoft Excel, and Open Office, which offers Open Office Writer and Open Office Calc.
In addition to maintaining hard copies of your financial information, recording that information in a spreadsheet will enable you to perform various tasks. Spreadsheets offer various tools and formulas that can automatically add, subtract, multiply, divide or edit your information so that you can use it for different needs (e.g. tax planning, savings, budgeting and forecasting). By using a spreadsheet, you are also able to use the computer to transfer your information to other people or places.
These tools can help you determine what you have, what you can spend, how you can budget and allow you to plan for the future. They also will provide you, or a professional, with the information you need for tax purposes, to use with accounting software or if the need to create financial statements arises.