Not that I was doing an incredible amount of transactions month in and month out, but I haven’t balanced the books since I started my business back in March. Being December, I had decided that it was indeed time for me to sit down and work through this. I did so with the help of my grandfather, who had run his own business for many years.
Being someone who knows the joys of cheap technology, my first instinct was to rush out and find some software that did what I needed, but then I realized I had no idea what I even needed! I’ve never taken an accounting class in my life! This is where the grandfather comes into play. Last night over beers, we sat and made up a ledger by hand. Altogether, the ledger is 16 sheets of accounting paper. The sheets cover a section of the business, such as Cash, Loans Payable, Accounts Receivable, Captial Stock, and so on. Some sections have multiple sheets for my own benefit, such as Income. I have a sheet for Income-Royalities, so I can track my royalty payments from Lulu and Unbound Comics.
Next, each sheet is divided into 5 columns: Date, Description, Debits, Credit, and Balance. From there, we went through all of my statements, tracking each and every transaction. It didn’t take long (probably longer than necessary because I am accounting-duh), but when we were finished, I finally had a good sense of the state of the company. My bootstrapping efforts have paid off; I’m not that far in the hole! Ha!
Most of the ensuing confusion is why we record Income received as Credits instead of Debit (because if you deposit money into the account, it is a Debit), but I think it is all starting to gel a bit more. It is weird to have so many skills, to be able to do so many things myself independently, and then to be laid low by something that feels so basic (and by basic, I mean, this should be taught in junior high as required cirriculum because it is important). Quite humbling.
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