What is Bookkeeping?

Bookkeeping is the act of tracking and recording the financial activities of a business. This includes expenses, sales, purchases and all payments. While business owners can bear the sole responsibility of keeping the company’s books, they may also decide to outsource the task to someone else. Nevertheless, every business should record and store all transactions made, and maintain an adequate account.

Why is bookkeeping important for your business?

The careful tracking and keeping of a business cash flow is important to know the financial stability and resources available in the business. The following points emphasize the necessity of bookkeeping.

• To track major and minor expenses
• To record all transactions
• To plan for future purchases
• To correctly account for every financial exchange, and financial balance.
• To be able to meet with financial obligations.
• To have an organised financial information, necessary for filing taxes.

How can you maintain an efficient Bookkeeping System?

The bookkeeper ensures to classify each business transaction, expenditure and sales; and also confirms that the books are reconciled.

Here are few tips for bookkeeping in a business
• Have a record of all financial transactions, and the balance of the accounts. This can be done using Google sheets, Excel or an accounting software such as Quickbooks. A ledger book can also be used, however, it is advisable to have paperless records, which is more secure.
• Always compare your bank statements with the business record to make sure they correspond.
• Summarise your income and expenditure, sales and purchases periodically (daily, weekly or monthly).
• Store invoices and receipts of bill and expenses.
• Be careful to include essential details and information in your records such as date, item, time, amount, etc.
• Separate personal funds and finance from business finance.

Bookkeeping is essential in every business, and helps business owners track the progress of their business.