Bookkeeping involves the systemic recording and organizing of all financial transactions in your business. It records how much you spend and receive.
Bookkeeping can tell small business owners how much they are spending and when they need to pay suppliers. Bookkeeping is the basis of the company’s accounting system, so you need it if you want to keep your tax returns accurate.
Traditional bookkeeping uses books and ledgers, hence the name. But now, bookkeeping software is more widely used.
How To Do Bookkeeping
Bookkeeping has two major tasks: recording and reconciliation.
Recording involves recording your sales and transactions. This was traditionally done using cashbooks, but businesses today are more likely to get sales data from point-of-sale or invoicing software. Business-related purchases can also be automated using bookkeeping software.
Reconciliation involves comparing your books and bank statements to see if they are in agreement. Some level of difference may be acceptable due to the timing of payments or deposits, but major discrepancies may indicate fraud. Businesses may reconcile daily, monthly, or annually, depending on the number of transactions. Reconciliation is also in order prior to submitting your tax returns.
Other Bookkeeping Duties
If you are doing bookkeeping for your business, you may also be responsible for the following:
This entails issuing invoices. Accounts receivables refers to the money clients owe to your business.
This refers to the company’s obligations to suppliers, meaning debts that must be paid off within a given period.
Payroll refers to the total compensation the business owes to its employees. This will entail tracking hours, calculating pay, and distributing the amount.
You don’t have to do the bookkeeping yourself. It is often better to outsource this function if you think you are needed in other more important areas of your business. Outsourced bookkeepers also make accountants, banks, and the IRS happy. A competent bookkeeper will help eliminate doubts on the accuracy of your financial data.
We Can Help
If you need a professional bookkeeper for your small business, our experienced experts can help guide you in the right direction. Contact us today at 818-452-2641 or fill out our contact form to schedule a free consultation.