Let’s not assume you know, and take it from the top.
Bookkeeping is the recording of financial transactions made by a business, this means keeping track of what your business spends and what you receive. The transactions would be recorded in daybooks, cashbooks, or journals, you can also use a spreadsheet program like Microsoft Excel.
Do you need a bookkeeper for your business?
You can either do this by setting up a software, or hire a bookkeeper to keep your books in check. A Bookkeeper’s responsibility is to record, classify, and organize every financial transaction that is made throughout business operations.
Amongst other reasons, one of the reasons why some startups fail is due to the poor management of money: sole business owners mostly can relate. It gets a bit challenging to separate business finances form personal finances, making it harder to account for some of the money that comes in, and goes out of the business because no one is holding you accountable for anything. This is where bookkeeping comes in. When studied thoroughly, you can see some of your spending habits which you need to change.
3 reasons why you need bookkeeping:
- To reflect on whether you are spending more than you make, vise versa. Moreover, bookkeeping enables you to seamlessly analyze your expenses, and adjust your budget, if need be. You will have a record of all your financial information you may need in a case where you want to plan or budget for the future.
- You can curate accurate tax returns. Tax preparation can be a stressful season for small business owners, this is where bookkeeping comes in. Instead of looking through a pile of documents to get the required information, bookkeeping ensures that this information is well organized beforehand.
- We have mentioned before, cashflow is one of the struggles small businesses have. Bookkeeping will help you mitigate that challenge by keeping track of the cash going in and out of your business. Having this kind of information will give you the confidence and peace of mind you need to make financial decisions.
- Record your sales (in a cashbook/spreadsheet).
- Note down every business-related purchase (keep proof of purchase).
- Regularly cross-referencing your business books against your bank statements to check that the transactions and balances match, A.K.A Reconciliation.
Other things to note…
- Accounts receivable, i.e. issuing invoices and making sure they’re paid, and accounts payable, i.e.paying bills on time.
- Payroll (paying employees).
There are many small businesses that use online bookkeeping software to speed up the job, this also cuts down on human data-entry errors and saves time. The benefits of these tools include, but not limited to: automatically pay bills, send automated invoice reminders to people who owe you money, and allow you to check cash flow from your phone.
Here are 3 softwares you can check out:
If you are too much of a busy for bookkeeping for your small business, then you can find someone to do it for you; outsource or hire. We have an article on what’s the best option between the two, again this depends on a number of things. If you wish to get a bookkeeper for your business, look no further: Accase Solutions would love to assist! Reach us here: