Bookkeeping is the process of recording all financial transactions that take place in a company. A company has various expenses and revenues that need to be recorded. Recording helps the company understand the patterns of costs and sales and aids forecasting and decision-making.
The financial data recorded by a bookkeeper is used to develop financial statements such as profit and loss statements, balance sheets, income statements, and cash flow statements. Bookkeeping is an integral part of every business and must be done meticulously. Here are seven reasons to hire a professional bookkeeper for your business.
Cash
A cash account includes all the money in hand and received from various sources. Ensure that the account contains only the amount received, not the one in progress. For example, a cheque yet to be cleared cannot be added to the cash account. Bookkeepers maintain both cash disbursements and cash receipts.
Accounts Receivables
Some customers do not pay immediately, and some business operations require the customers to pay at a later date. Accounts receivable include the amount yet to be received against the products or services delivered to the customer. However, the money is due from the customers who have received the products. It is essential to know that accounts receivable include the money the money will receive.
Inventory
A company ensures that it has some raw materials and finished products present to meet unexpected demand. This stock is called the inventory. The items are tracked, and their value is included in the inventory account. Moreover, a bookkeeper must calculate the worth of the inventory efficiently. However, this helps reorder raw materials at the right time and ensures that the goods are not lost or forgotten in the warehouse. 
Accounts Payable
Accounts payable are the money the company owes to another company, such as a supplier. The money is paid against a service received. For example, if a company orders raw material from a supplier and gets the goods, the company owes money to the supplier, which becomes part of accounts payable. Accounts payable are the opposite of account receivables. Furthermore, an accurate calculation of accounts payable helps the company clear the payables on time to ensure strong relationships with suppliers.
Owner’s Equity
The owner’s equity account is one of the most important as it includes the amount pooled by each owner into the company. One person owns small businesses, and he enjoys the profit only. However, for large-scale enterprises, the company must pay shareholders dividends. The account includes the money invested in the businesses and tracks all the money drawn from the company. It must be carefully managed as it determines the profitability of the shareholders.
Retained Earnings
After paying the dividends and clearing the payables, the company may be left with the retained Earnings. It is a cumulative account, which means the value shown on the account is the total money retained by the company since its start. The account is easier to manage because it does not require any clearing. It is crucial as it interests potential investors and lenders who may want to invest in the company.
Sales
The sales account is of utmost interest to the company as it includes all the incoming product and service sales revenues. Recording the sales on time is essential because the company will likely lose receipts over time. The sales account determines the company’s ability to sell its products to the target customers. Depending on the sales terms, the sales account may be credited against cash or accounts receivables.
Conclusion
In conclusion, bookkeeping is the backbone of any business’s financial management. By meticulously recording monetary transactions and maintaining accounts such as cash, accounts receivables, inventory, accounts payable, owner’s equity, retained earnings, and sales, businesses can gain valuable insights into their financial health, make informed decisions, and ensure compliance with regulatory requirements. Hiring a professional bookkeeper can streamline this process and help businesses maximize financial accuracy, ultimately contributing to long-term success and growth.
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