Bookkeeping is the process of keeping a record of every financial activity in a small or large organization. This includes sale and purchase records, payments, invoices, and all financial records. The primary goal of bookkeeping is to manage and record every financial activity or transaction in a detailed way to obtain clear information and reflect the organization’s financial status.
Start-up owners have a lot to think about when it comes to bookkeeping. An individual with good experience is mandatory as bookkeeping is vital for any business to operate properly.
Having a tight budget is common for a new entrepreneur. While there are investors who are interested in financially backing your business, they also need to know where their money is going.
Basic Steps for Bookkeeping:
Information Collection:
The most important step in bookkeeping is to manage all your activities systematically. For instance, try to gather data in an accurate and timely manner. This includes collecting check records, deposit records, debit credit history, invoices issued, bills from vendors, and bank statements.
Proper entry:
To properly enter the correct information, one of the biggest mistakes that any entrepreneur makes is not to enter the data correctly and in a timely manner. Proper accounting records are vital in bookkeeping.
Balance Sheet:
The balance sheet is also essential to keep your books and journals intact and more productive. Reconcile your books in a specific period and make it a regular practice.
Hire Professional:
It is essential to hire a professional for the accounting responsibilities and ensure work is done properly. There is no need to hire a full-time accounting professional in a new business. You can easily hire a part-time bookkeeper and increase their hours or hire a professional on a full-time basis when your business revenue allows.
Areas for Proper Attention:
Bank Statements:
Reconciling your bank accounts is necessary, and as a new owner, you need to monitor your books for any unwanted activity. Now, it is easy to get your bank statement because online banking gives you the freedom to obtain your bank statements at any time. Compared to previous decades, it is easier to get your bank statements and reconcile them with expense receipts and invoices whenever you like.
Credit Cards:
Credit card fraud can sneak up on you when there are a lot of small charges. Make sure you have proof for every activity on your credit card. This is especially important when using a company’s credit card because multiple employees often use it.
Invoices:
Creating an invoice is an important task. Invoicing your customers is important because most business owners do not pay attention to invoices; after getting paid, you need to issue invoices to maintain your record and reconcile it when required. Also, make sure you check your invoices daily as to which ones are due to be paid and which ones have been paid.
Online software can help generate invoices and directly email them to clients, which can help small business owners complete this task efficiently and correctly.
Employee’s payroll:
If you are going to hire employees, you need to make sure you are informed about payroll and track it properly. This includes personal records, retaining employment records, and benefits given.
Start-up Cost:
Starting a business can only be possible if you have a specific budget and cost of the business in mind. Keeping track of your business start-up cost plays a vital role in planning a company’s future. It gives you leverage to plan, so when profit starts to generate, remember your initial start-up cost so that you can deduct that amount from your generated income.
Bills:
Paying your bills when due practice gives you an idea of your monthly expenses. Bookkeeping can be easy if you pay your vendors on time and properly record it in your books. Do not neglect to keep track of your smaller expenses like postage, printing mileage, etc.
As a business owner, you need to decide if you want to do the bookkeeping yourself or hire someone for the task. Managing books from the start allow you to keep better control and understand your work expenses.
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