If you’ve opened your own small business, knowing how to keep the books is one of the most important lessons you’ll need to learn. While returning to school for your MBA is a great idea, you certainly can’t wait for two years to figure out how to keep track of your business’s financials. Here are five things that you need to know when it comes to keeping your company’s books:

1.Create a Budget

Just as you may have done for your personal life, you’ll need to create a budget for your company. Creating a budget can be difficult if you haven’t begun to turn a profit, but you can always revamp your budget once your business becomes a success. When you’re trying to grow your business, you’ll need to decide how each dime will be spent. Decide what you will spend on supplies, how much will be allotted towards the purchase of new equipment, how much you will take as a salary, and even how much will be put into savings. Creating a budget will help you keep your business on track and prevent you from spending every last dime on things that aren’t essential.

2.Keep Records

If you buy something for your business, stash the receipt away in the appropriate file. If you sell an item to a customer, keep the invoice tucked away where it belongs. Keeping records and receipts organized is one of the most important, and often most difficult, tasks of a business owner. When it comes time to pay your taxes, you and your accountant will both be happy that you’ve kept all of these important documents.

3.Maintain a Ledger

The importance of keeping a ledger cannot be stressed enough. Decide how often you’ll post to your ledger and stick to your plan. You can post daily, weekly or even monthly, but you must post. Gather your receipts and write down all of the money that has come into your business and all that has gone out. Keeping a ledger is essentially no different than keeping up with your personal checking account registry.

4.Create Financial Reports

There are several financial reports that you’ll want to create once a month: a balance sheet, a cash flow analysis and a profit and loss forecast. There are dozens of small business accounting books that can show you exactly how to create these reports. Alternatively, you can speak with your financial advisor who can explain the ins and outs of the process.

5.Utilize Software

While there is nothing wrong with taking pencil in hand and setting it to paper, you’ll find bookkeeping much easier if you purchase great software. Quick Books and Quicken are the two preferred software programs of small business owners. By utilizing this software, you’ll simply have to input your data and make a few keystrokes to have financial reports created for you. The software can even transfer your records to tax preparing software like TurboTax when April rolls around.

Keeping the books for your small business isn’t difficult, but it does have to be done. Without proper record-keeping practices, you’ll never know how successful your business is or how deep in the hole you are. Follow the tips above and you’ll be sure to keep the books for your company organized and legal. If you find yourself overwhelmed, be sure to consult a financial adviser or accountant for assistance.

Rita Freid blogs about startups and other business issues. If you are interested in business and startups, you might consider an MBA degree, such as those programs offered by http://onlinemba.neu.edu/ or http://www.brown.edu.