Bookkeeping For Small Business

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Basic Bookkeeping for Your Small Business

Every small business should budget for bookkeeping services. Bookkeeping refers to record-keeping aspects in accounting. It is mainly the accounting process of recording all information regarding the transactions and financial activities of business. The benefits you gain far outweigh the demerits and the rates are affordable to hire and grow with bookkeeping services. Bookkeeping for small business basically involves the following:

BookKeeping for Business
  • * It prepares source documents for all the transactions, operations and other events of the business. It is the beginning of the accounting process.

  • * The financial effects of the transactions and other events of the business must be entered in the source documents. It is very important because the growth of the business is the result of its bookkeeping transactions. The bookkeeping process begins by determining the relevant information about each transaction.

  • * Compose original entries of financial effects into journals and accounts, with appropriate references to source documents. Using the source documents for every transaction, the bookkeeper makes the first, or original, entry into a journal and then into the business accounts. The journal entry records the whole transaction in one place and then each one is recorded in the two or more accounts that are affected by the transaction.

  • * These procedures are the critical steps for getting the accounting records up-to-date and ready for the preparation of management accounting reports, tax returns, and financial statements.

  • * Compile the adjusted trial balance. This balance is the basis for preparing reports, tax returns and financial statements.

  • * Bring the bookkeeping for the fiscal year just ended to a close and get things ready to begin the bookkeeping process for the coming fiscal year.

Benefits of Bookkeeping to Small Businesses

1. Cash Management Benefits

Cash management benefits include the capability to manage supplier and customer accounts by viewing them on paper, create a business budget, and track deposits and payments. With cash management, you get track a single pie your business spends.

2. Business Decision Benefits

Bookkeeping records offer benefits that help you make smart business decisions. With bookkeeping, you can identify money-making opportunities, avoid cash-flow problems, and find ways to increase income or decrease spending. Good bookkeeping records are beneficial when you're applying for a business loan. By keeping good and accurate records, you make it easier for lenders to make decisions about your business.

3. Compliance Benefits

No matter what type of business you have, compliance with business tax laws is very essential. Few bookkeeping benefits depends upon your situation, includes the ability to pay income taxes, payroll taxes, workers compensation and sales taxes. You will be less anxious about your bookkeeping records if you find yourself facing an Internal Revenue Service audit. American Institute of Professional Bookkeepers states that - bookkeeping records are valuable during an audit. It comprises of items such as cancelled checks, receipts, tax returns, and other papers related to the audit.

4. Risk Reducing Benefits

The major risk-reducing benefit associated with bookkeeping is the ability to detect fraud and theft. If your bookkeeper is honest and good at the job, he will be able to spot suspicious business transactions.

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