In order to keep track of your finances with your new business and understand what financial state that your business is in at all times, you will have to learn to balance your books. Balancing your books will entail recording all income, assets and any losses that your company takes over the annual course of business. You will need to purchase a ledger from the local office supply store and a box of hanging file folders for your filing cabinet. It is recommended to keep one separate area for business records within the office in order to retain organization of the necessary paperwork. Take two of the folders and label them as income and expenses. Some companies require monthly folders for each of these, the size of the business will dictate the necessity or not.
Gather all of your documents as they are received. Make a balance sheet on your own inside your ledger or print one off of the internet. Separate into two different categories; one column for liabilities and another column for assets. Record every single item as it is received or sent out. Invoices, bills, sales receipts and credit card statements; nothing should be omitted from this list to properly balance your books. Everything from receipts to loan coupon books to postal charge amounts will need to be included. If it has some sort of economic impact upon your company, then be sure to keep records of them.
Once you have gotten the business rolling and have monthly entries in your ledger, you can calculate the net worth amount. By subtracting the total amount of liabilities away from the asset total, it will give you an idea of the financial state of your business. The equity is basically the net worth of the company and is normally the bottom line figure when discovering how successful the business has become. There are many great websites for small business owners such as the IRS website and toolbox.com. Both places have excellent small business advice and resources to run an efficient business while being profitable, as well.