Bookkeeping Explained

No Comments
Bookkeeping

Bookkeeping is the duty to record the financial transactions and information pertaining to a business, on a day-today basis. It is concerned to ensure that records of financial transactions for those individual are accurate, up-to-date and comprehensive. Therefore, accuracy is important and vital to that bookkeeping process.

Bookkeeping must not be confused with accounting. Bookkeeping is more the preliminary work that provides the information that goes into the accounts.

In fact, if you compare the differences between bookkeeping and accounting then you will reveal the true essence of the definition of bookkeeping.

What does bookkeeping involve?

Common financial tasks and transactions that are involved in the bookkeeping process are mainly including:

• Billing for services provided or goods sold to clients.
• Recording customers’ receipts.
• Recording and verifying and invoices from suppliers.
• Paying every supplier.
• To process the pays of employees pay and the related reports for the governmental.
• Monitoring the individual accounts receivable.

• Recording and other adjusting entries.

• Providing financial reports.

How is bookkeeping done?

Nowadays, the bookkeeping process is performed with the use and help of computer softwares. QuickBooks (from Intuit) is – as example– a low-cost an accounting and bookkeeping software package. Bookkeeping requires knowledge of credits and debits and a basic understanding of financial accounting process, which is including a balance sheet and income statement.

The difference between Accounting and Bookkeeping

Katie Bunschoten, is the owner of consulting and bookkeeping firm; KHB Office is helping new businesses get up and running, and tutoring owners how to keep at the top level of accounting. A Small Business Blog had recently asked for her take on accountants vs. bookkeepers and when to hire them.

She says that ultimately bookkeeping is as literal as it sounds: it is the keeping of books i.e. the production of financial transaction records. Accounting is more to do with the analysis, reporting and even possibly the consulting and advice sharing based off of the back of these reports.

No transaction is exempt from bookkeeping, including loans given and received, sales and deductions as well as private expenses. Whatever goes in or out of the business is recorded with full accuracy.checkout this website for more information.

The double entry system of bookkeeping

The double entry system of bookkeeping is based upon a fact where every transaction involves two parts and that this will therefore affect two ledger accounts.

Can you guess what these two things are? …yes you’ve got it, debts and credits. Or outgoings and incomings, whatever you want to call them they are the cornerstones of your business.

Bookkeeping

Every transaction involves a credit entry in one account and a debit entry in another. Any errors occur when the books do not ‘balance’ i.e. the sum of all the debits do not tally up with the sum of all the credits.visit http://www.tampabay.com/blogs/the-buzz-florida-politics/senate-questions-legality-of-enterprise-floridas-bookkeeping/2245523 for more detailed information.

In conclusion, bookkeeping using bookkeepers, is namely the keeping of financial transactions, different to accounting in that it’s more the preliminary process where the data is retrieved and stored.

Some Benefits of accurate Bookkeeping Accounts

No Comments
Bookkeeper task

There are numerous reasons why keeping accurate accounts using bookkeepers will benefit your business.

Making Informed Decisions

Firstly, working with bookkeepers on your accounts will also help you make informed decisions about any issue. If you maintain your bookkeeping processes and completed them on a weekly basis then BAS returns, budgets, end of year financial statements and your tax return can be completed more efficiently.

Identifying Problems

Bookkeeping using your favorite software will help you identify any key problem areas especially as your accounts will be up to date. The reason for this is that you can regularly and more accurately be informed. You may have never thought about it but by keeping your books up to date by hiring a bookkeeper you could potentially save money. In fact it’s pretty much guaranteed as you will now be able to spot any insufficiency that may cause financial problems. For example, you could notice that your most recent marketing plan was not having the desired effect. You would then stop this particular campaign before you wasted any more money and change direction, maybe utilizing your marketing budget on something more productive. Ultimately you will have more time to promote your core business growth rather than wasting it following endeavors that are not working,

When tax time arrives you want to make sure that your business is able to deduct all expenses in order to reduce payable taxes. If your accounts are incomplete or not ready this may cost your business more in the long run. Moreover, it’s always great to have your taxes in order so you know exactly what your net profits are. This is where hiring a bookkeeper will come in handy

Business Expansion

When you want to expand your business banks will typically look for clean and up to date financial statements before making a lending decision. When you provide timely reports, all financial institutions will help and be better inclined to help your business with additional credit or increasing loans. By having regular re conciliation’s and engaging a bookkeeper to manage your books, your business will be seen by the bank with more credibility, when additional funds are required.

With accurate books, you will have a clearer picture of your business so you can make projections for future expenses and future income and also for upcoming project, and that is the way to give your business the right direction toward increasing growth. A business budget will help your management team to spot problem hotspots or even business wins and areas of growth that you can extrapolate on.

Cash Flow Projections

Furthermore, when managing your business you will need to focus on generations some cash activities, as cash is not equivalent to any accounting profit. By focusing on actual cash flow projections, it can provide an accurate indication of your business being able to meet short term obligations. When reviewing regular reports from debtors, you will be given a more accurate position of how quickly your clients pay you and you will be able to identify areas for improvement.

Bookkeeper task

To conclude, bookkeeping is essential for your business to develop for many reasons. Regular assessments and cash flow projection could in turn lead to business expansion. If you are looking for a bookkeeper then why not check out Bookkeeperco.com.au. They can help with your inventory management, payable accounts, receivable accounts, payroll and much more.