Bookkeeping means recording your financial transaction such as sales, purchase, income, payment etc. if you are a businessman, no matter what type of business you are in, bookkeeping is an essential requirement. Many businesses might fall at the initial stage because of mismanagement and poor accounting.
There are some basic data which should be recorded. They are
- Record of all your sales and also the copies of the invoices issued by you company.
- Record of all your business acquisitions and everyday expenditure.
- All the copies of different bank statements.
- Record of the loans or personal expenses that you tool from the business.
- Invoices of the purchases and expenses.
Reports indicate that lack of liability may also cause loopholes for deceitful activities in the financial department. If you do not save the receipts of different expenses, it will be hard to maintain the inventories. However invoices should be properly documented whether it is personal or for business because it will help you to choose a way forward.
By keeping these records you or your accountant can prepare a balance sheet from which you can know the expenses, incomes, profit and loss your company has made. This will also help you to diagram the further business plan for your company.
Depending on the type of business there are many particular type of data that need to be recorded such as cash book, petty cash book, order notes and invoices, details of other business income, details of private investment in the business, electronic record of sales, utility bills, stock record at the end of the year, all the records of your business property including bank and building society statements, pass books, paying in slips cheque stumps etc.
These records are really important for your business. If you fail to keep precise and inclusive records of these things you may end up paying extra tax than due. Most of the companies hire an accountant to calculate their yearly inventories and balance sheet. They charge you based on the time duration required to prepare your accounts. So if you have all the required records those are necessary for preparing the inventory, it will reduce the preparation time thus reduce the amount they charge.
Not only that if you need to borrow cash from a bank to get started another huge aspect of small business bookkeeping will help you to get the loan. In small businesses it is like the backbone of your business. Bookkeeping, especially in first few years of your business will create the platform for your business and help you in the planning of your progress in the business.
All the above reasons are adequate to make sure you keep a good book and records but the most vital reason is to guarantee that you have control over your industry and that you can evaluate its effectiveness and cash flow situation thus ensuring you are conscious of any possible problems that might occur and can make business decisions with all available information immediately.
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