Every business earns and spends money but have you ever wondered who takes care of all the financial operations? Bookkeepers help you track all of it. Bookkeepers differs from accounting. They bring structure to a business’s financial operations.
Lets us dive into the basics of bookkeeping covering concepts and practices for those who are new to the field.
What Is Bookkeeping?
Bookkeeping is the process of documenting and tracking a company’s financial transactions. They manage all the financial data of a company. The companies can track all their financial transactions on their books with accurate bookkeeping. Bookkeeping is primarily about recording incoming and outgoing transactions.
Why is Bookkeeping Important?
Bookkeeping plays a huge role in the company. Every company has a bookkeeper that takes care of their financials. The more money is passing through a company, the more you need to ensure that everything in the finance department is handled properly, a tiny mistake and it can lead to a disaster.
As your company gets bigger you are also vulnerable to errors and frauds, Bookkeeping helps identify transactions and ensures that the books of accounts are correct and complete. It helps to detect any errors or frauds in the business.
Types of bookkeeping
The most common types of Bookkeeping are single-entry and double-entry bookkeeping
Single-entry bookkeeping records all transactions in just one row. Typically, single-entry bookkeeping is suitable for keeping track of cash, taxable income, and tax-deductible expenses. The single-entry bookkeeping method is often preferred for sole small startups and companies with minimal transaction activity. The single-entry system tracks cash sales and expenditures over a period of time.
Double-entry bookkeeping records all transactions twice, usually a debit and a credit entry. Typically, double-entry bookkeeping uses accounting for liabilities, equities, assets, expenses and revenue. Double-entry bookkeeping is the practice of recording transactions in at least two accounts, as a debit or credit. When following this method of bookkeeping, the amounts of debits recorded must match the amounts of credits recorded.
What does a bookkeeper do?
A bookkeeper’s job is not just about numbers, it requires patience and meticulous analysis to ensure an organization has accurate financial records. A bookkeeper needs to have proper planning and scheduling as it provides a clear overview of an organization’s financial position.
A bookkeeper’s job is to monitor the company’s financial transactions daily analyzing and addressing any financial issues. They have to report and identify for any discrepancies or potential issues early on.Tax preparation is a huge process that needs accurate reports and records with proper accounting systems, outsourcing tax preparation services can be implemented for generating proper reports, especially for managing payroll.
Bookkeeping services
Online bookkeeping services is a good solution if you want to save money, outsourced bookkeeping services help you decide and manage the needs of your business and it may also include extra features such as payroll or tax documents. If you have a small startup selecting an online bookkeeping service might be the right choice for you.
