If you are a business owner in Oklahoma, then you know that keeping track of your finances is essential. A general ledger can be a great way to achieve that.
Understanding a general ledger
A general ledger is a record of all financial transactions that take place within a business. This includes income, expenses, assets, liabilities, and equity. The purpose of a general ledger is to provide a clear and concise picture of a business’s financial health. It is also used to prepare financial statements such as the balance sheet and income statement.
How to set up a general ledger
There are so many ways to create a general ledger; however, some components stay the same—for instance, an account of your assets and liabilities, as well as revenues and expenses. You can also include inventory, owner’s equity, and other items in your general ledger.
To set up your general ledger, you will need to gather all the relevant financial information for your business. This includes income statements, balance sheets, bank statements, and other documents containing financial data.
The next step is to create a chart of accounts. This is a list of all your different types of business transactions. For example, if you have a business bank account, you will need to create an “accounts receivable” account for money owed to you and an “accounts payable” account for the money you owe to others.
Then set up your general ledger software. There are many different software programs with set templates available online, like QuickBooks, but you can also use Microsoft Excel, i.e., if you are looking for a more customizable solution.
Lastly, generate reports from your general ledger. These reports will give you a clear picture of your business’s financial health and allow you to make informed decisions about where to allocate your resources.
Creating a perfect ledger will take several trial runs; however, things get easier once you find what works for your business. Don’t forget to keep updating your books with every transaction you make.