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Every business transaction affects a minimum of two accounts. The sum of the debit and credit for each transaction is inherent in the basic accounting balance sheet equation, Assets = Liabilities plus Capital. It is because of this duality that the bookkeeping system is known as the double-entry bookkeeping system. The rules of debit and credit posting to the balance sheet accounts are that debits signify increases in asset accounts, and decreases in liability and capital accounts. The credits signify decreases in asset accounts, and increases in liability and capital accounts.

The process of recording a transaction into a journal is termed journalizing. In a two column journal, it should include the date, the debit (including the title of the account and the amount), the credit (including the title of the account and the amount), followed by an brief explanation for the not obvious entries. Note that the amount of the debit and credit entries must always be equal. Also, it is recommended that the title of the entries should be the same as the accounts used in the journal.

From time to time the equality of debits and credits in the ledger should be verified. Generally this verification is done at the end of an accounting period such as monthly, quarterly, semiannually or annually. This verification is termed a trial balance. The trial balance does not provide complete proof of the accuracy of the ledger. It indicates that the debits and credits are equal. In some automated write up systems you can go back to the original entry and make a change that will be reposted to get a corrected trial balance. Other systems require a correcting or adjusting entry to correct a misposting. There are also required entries at the end of a period to record internal transactions which are called adjusting entries. An example of this is the periodic debit and credit to depreciation expense and accumulated depreciation. All automated write-up packages will display and/or print this report at the user's request.

After a person selects the corporate name and state of incorporation, a document called The Articles (or Certificate) of Incorporation must be filed with the Secretary of State of the state of incorporation. The key sections are the Corporate Name, the Purpose of the corporation, Duration, Authorized capital, Name and address of the registered agent and Other required provisions. Speak to your local CPA about the filing requirements and content of the Articles of Incorporation.

The incorporator is the person who initially organizes the corporation and files the Articles of Incorporation. The Incorporator can be the CPA, lawyer, prospective shareholder or another individual. The Incorporator usually, uses a document called an "Action of Incorporator" to perform important functions, such as electing directors if they are not named in the Articles of Incorporation. The Incorporator also adopts bylaws, and signs the Articles of Incorporation. The "Action of Incorporator" must be dated and inserted into the corporation's minute book.

The bylaws of a corporation contain the procedures and rules that govern the rights and powers of the directors, shareholders and officers. The bylaws are usually adopted by the Incorporator or by the Board of Directors in an organizational meeting or with the written consent in place of the organizational meeting.

Generally, a corporation's bylaws cover the size of the Board of Directors; when and how board meetings occur; when and how shareholder meetings occur; the duties and responsibilities of the officers; The procedures for exercising voting rights; the procedure for dividends; the company's calender or fiscal year; and the indemnification of the directors, officers and agents of the corporation.

The corporation's minute book is where various important records are kept. It should include the Bylaws, Articles of Incorporation, and minutes covering all meetings and actions by the Board of Directors and shareholders. The minute book must be kept current and contain pertinent, necessary documentation. The minute book should be stored at the corporations registered office.

The filing fees with the various Secretary of States vary, but generally the fee range is between $100 and $300.

The Board of Directors should try to accomplish the organizational resolutions of the corporation by adopting them in their first meeting. Generally, they should authorize the adoption or ratification of the bylaws, the election of the initial officers, the designation of the principal officer, the designation of the corporation's banks, the selection of the calendar or fiscal year, the selection of a specimen stock certificate for the common stock, the issuance of stock to initial shareholders, the payment procedure of the organizational expenses, and the possible election of the S corporation status.