Bookkeeping
Bookkeeping is a growing profession – it is demanding, exciting, challenging and above all, rewarding. It is about understanding how a business works and then providing accurate figures that enable the business to know exactly how well it is doing. For men and women of all ages and from all backgrounds it provides outstanding career opportunities.
The basic system of double entry bookkeeping was invented more than five hundred years ago by a Cistercian monk called Luca Pacioli. His system still endures today and is used throughout the world, making bookkeeping a truly international profession. This writeup will give an understanding of how to train to become a bookkeeper and do your own stuff. It will also help those who already have a qualification or have been working as a bookkeeper.
Bookkeeping therefore is the process of maintaining books of accounts involving daily transactions. Bookkeeping plays an important role in your business and indicates the exact position of your business finance. There is a lot of hard work and risk involved in owning a business, but nothing compares to the satisfaction of watching your own venture grow and become successful. The following is a list of bookkeeping tips for you:
1. Have a Habit of Daily Bookkeeping
Remember, consistency is essential to successful business bookkeeping. Many small business owners start their bookkeeping with a lot of enthusiasm, but in time, they fail to maintain it consistently. Inconsistency in bookkeeping may be the biggest mistake you make and might prove fatal for your business.
Maintaining daily records of financial transactions is one of the most important aspects of bookkeeping. The financial status of businesses can be known only by regular maintenance of books. In case of cash transactions, everything is paid and received must be updated regularly. If the transactions are not purely based on cash, then the invoices raised or due should be maintained as they are mandatory records for any business. Issuing or cancellation of checks must be done with care and in both the cases, clear records must be maintained.
2. Keep Receipts for All Transactions, Keep a Trail for Audit
If using a check or credit or debit card, you don’t need a receipt; just refer to your bank account and get the details. However, the Internal Revenue System (IRS) policy clearly states that any cash or check transaction needs receipts to be validated. If you cannot produce relevant receipts for transactions, you cannot claim certain tax benefits.
Your bookkeeping must, too, ensure that you can easily retrace your business’s financial transactions. That can be done in different ways such as keeping records in their numeric order, avoiding skipping invoice or check numbers and maintaining separate records for your business and personal transactions. An audit trail is nothing more than a record of all your invoices and checks in numeric order. The thing to remember is never skip numbers. Record voided check and invoice numbers in numeric order with all other checks and invoices, only denote each one that is “voided.” This assures there will be no gaps in your numerical sequence and leaves a proper audit trail.
3. Get a Bank Statement Monthly
You should get a bank statement at the end of each month to compare it with the in-house accounts. This will track all the expenses as well as incomes and help business owners know their exact financial position.
When opening a business checking account, you should request a statement with a month-end cut-off date. This will save you time when reconciling your records with the bank statement every month. The closer the cut-off date to the month end, the fewer checks you will need to record.
4. Maintain just One File for All Documents
This sounds simple but is very important to avoid hassles happening at the end of the year. You should simply maintain a file for all the transactions and file all relevant papers at the time of their occurrence to reduce stressful in finding documents to support financial transactions.
5. Use QuickBooks
Business people can manage their accounts manually or electronically, depending on the size of their business and the volume of transactions. However, in the current time, computerized bookkeeping softwares are readily available to suit all types of small, medium, and large businesses.
Instead of hiring a professional bookkeeping firm, you can easily use a popular software named Quickbooks to maintain proper accounting and bookkeeping records for your business. Quickbooks makes bookkeeping easy in calculating incomes and expenses and make a great backup system for all your documents. It helps bookkeepers maintain all kinds of account statements and these details can also be backed up in case of computer troubles.
Ms. Brown
Auditor
Edmonton, Canada
Written by MsBrown
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