How to Learn Accounting without an Accounting Background

An accountant is a professional with a bachelor’s degree who provides financial advice, tax planning and bookkeeping services. They perform various business functions such as https://www.bookstime.com/articles/accountant-for-self-employed the preparation of financial reports, payroll and cash management. The eight-step accounting cycle process makes accounting easier for bookkeepers and busy entrepreneurs.

We will present the basics of accounting through a story of a person starting a new business. The person is Joe Perez—a savvy man who sees the need for a parcel delivery service in his community. Joe has researched his idea and has prepared a business plan that documents the viability of his new business. In accounting, you’ll come across certain titles which appear to bear similar duties but actually have unique job descriptions. In this section, we’ll briefly review the roles of accountants vs. CPAs and tax professionals.

Learning Financial Statements

It’s useful for small businesses and freelancers who don’t have the resources to hire an accountant or bookkeeper. Besides, this frees up time so you can focus on running your business smoothly. Check out our recent piece on the best accounting software for small businesses. Generally accepted accounting principles (GAAP) require public companies to utilize accrual accounting for their financial statements, with rare exceptions.

It’s vital to maintain self-awareness and discipline to stay on top of your tasks. But learners who want to become a licensed CPA will need to meet specific criteria which vary by location. When studying financial accounting principles and equations, keep in mind that the goal is not memorization, but application. Having a solid understanding of the components of each financial statement and how to analyze them will also prepare you to take on the more complex principles of financial accounting. Small businesses often work with tax advisors to help prepare their tax returns, file them and make sure they’re taking advantage of small-business tax deductions. Though you may not work regularly with a tax specialist year-round, you’ll want to connect with one sooner rather than later so you’re not rushed come tax time.

Set up a small business payroll system

Depreciation Expense and Accumulated Depreciation can be a hard concept for accounting students. It’s easy to get confused or struggle to understand what goes where in a journal entry and to keep the… For every transaction, both sides of this equation must have an equal net effect. Below are some examples of transactions and how they affect the accounting equation. Accounting software makes it possible to do much of this on your own, though you may decide to outsource some basic bookkeeping tasks to an online bookkeeping service as your small business grows. Depending on your business structure, you might also want to open a separate small business credit card to earn points or other rewards and build your business credit.

COGS or COS is the first expense you’ll see on your profit and loss (P&L) statement and is a critical component when calculating your business’s gross margin. Reducing your COGS can help you increase profit without increasing sales. It’s a critical component when calculating and managing your cash flow. Accruals are credits and debts that you’ve recorded but not yet fulfilled. These could be sales you’ve completed but not yet collected payment on or expenses you’ve made but not yet paid for.

Learn accounting with online courses and programs

Open a dedicated business bank account to separate your business finances from your personal finances. A business checking account, as well as a savings account, will help you organize your revenue and allow you to plan for taxes at the year-end. When you first start out you may opt to use a simple spreadsheet to manage your books, but as you grow you’ll want to consider more advanced methods like QuickBooks or Bench.

• This is a promise from the accountant that they’re not trying to mislead anyone.
• Credit is important for securing funding, as well as potentially financing large purchase orders in the future.
• WGU is an accredited online university offering online bachelor’s and master’s degree programs.
• Tax professionals include CPAs, attorneys, accountants, brokers, financial planners and more.

Explore the different educational options offered through edX and find the class that meets your specific learning objectives. You have a variety of options when it comes to learning about financial accounting, including in-person classes, online courses, accounting textbooks and publications, and advice from accounting definition colleagues. Many accounting practices have been simplified with the help of accounting computer-based software. These systems can be cloud based and available on demand via application or browser, or available as software installed on specific computers or local servers, often referred to as on-premise.