Some bookkeeping basics · The Tax Strategy Network

Some bookkeeping basics

For people using bookkeeping buddy it’s worth having a basic understanding of a few concepts. You can let the ai do its magic for you, but if you have questions then learning this little bit can be helpful.

Types of transactions that show up in back and credit card statements:

Income - someone paid you for a good or service

Expense - you paid for a good or service that was consumed. There’s no residual value after using the good or service

Transfer - transfer in to the company from a personal account, transfer out from the company to a personal account, or transfer between one company account and another. These are ignored for profit & loss purposes. On bookkeeping buddy you will see them grayed out.

Asset and liability payments - these are explicitly not supported by bookkeeping buddy. Generally they will be disregarded as transfers

Here’s an example of a bundle of transactions that you might see:

Pay phone bill with credit card $150

Receive money from customer $700

Pay the credit card bill $400

Withdraw $50 to personal checking.

The $150 is an expense

The $700 is income

the $400 credit card payment and the $50 withdrawal are both transfers and ignored for p&l purposes

Net income: 700 - 150 = 550

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