A lot of home businesses fail because they lack the necessary financial system to track down the flow of their money. More often than not, home based business owners are not really very keen at keeping their books of accounts, thinking that as long as money keeps coming in, they will be alright.
Unfortunately, things are not really that simply when you are engaged in business. If you want to stay in business for a long time, you will need to keep track of your financial flow for your own use and for taxation purposes. Note that if you do not keep track of your income, sooner or later the IRS will be unto you and you will get into big trouble.
Setting up your own simplified bookkeeping system is not really very complicated. If you like to keep your records in your computer, you might want to buy accounting software or just simply use whatever programs that will allow you to make a spreadsheet in your computer to record your daily transactions.
However, you have some money to spare for an accounting program, it would be better to have one. There is a number of easy to use accounting software being sold in the market today. The good thing about these accounting programs is that you do not need to worry about balancing your books of accounts. You simply input all your data in one page and the program will run on its own. Most accounting programs will automatically perform the different accounting process and will immediately update your statements of accounts. Retrieving data from an accounting program is also easy. All you need to do is to go to it archives and select which ones you want to see.
For instance, if you want to know how much your net income is for the month, you simply pull-out the income statement page and you will see your income instantly. Another advantage of using a computer accounting program is that you get rid of all the papers and ledgers in your workplace.
Now, in case you are not comfortable using your computer to balance your books, then you just have to you things the old-fashioned way. What if you do not know anything about accounting processes? Never mind if you are not good in accounting and balancing statements of accounts, just keep a simplified records of your transactions.
A three column worksheet will do nicely.
You can easily find this type of worksheet in the bookstore. When dividing your worksheet, you can have one column for all the money you received in connection with the business, another column for all the money that you spend for your business and the third column will be for your running balance.