Put An End To Your Bookkeeping Woes

Without a doubt, January is  one of the busiest months for most businesses because it is the time where recreating financial records is essential. Keeping abreast of your financial records provides you an idea where your business is headed. However, bookkeeping can be really stressful once your mind gets cluttered up with loads of financial information. Bookkeeping does not have to be a daunting task if you can properly manage your records.

You can avoid the stress by following these practices:

1.    Create a system – For sure, you have already identified your business’ areas for improvement and this year, you need to improve your system so you can keep up with the demands of your business. If you continue to follow ineffective practices, your business processes will remain stagnant. Technological advancements can help you speed up the bookkeeping process. For instance, software programs that enter the information quicker than the old process allows you to attend to other business transactions. These software programs also make record-keeping more practical because you get to store essential information in your data base so you can easily retrieve them in the future. You can also closely track your payments for taxes using the software.

2.    Capture data in real time – It might be easy to miss out on capturing unnecessary details such as using your personal card for your business because you forgot to bring your business credit card. However, when using your personal card for business transactions becomes a habit, the expenses can add up causing you to be entangled in a diabolical mess. These details, when overlooked can cause you to pay more income tax than you should. See to it that you record or capture every detail of your transactions so you will know where your business is going.

3.    Have a separate folder for your business expenses – It is easy to include all of your receipts and invoices in one folder, but if you are going to need them for keeping track of your financial activities, you will realise that everything is mixed up. Instead of placing all receipts in one folder, have a separate folder for your expenses so you can easily retrieve them. Not only will you speed up the process of generating your invoices, but you will also save time as the documents you need are already available.

4.    Update your data base regularly – Aside from setting up a system, you should also update your data base on a regular basis so you will know if there is any duplicate entry. However, you should take note that updating your data base does not have to happen every day. It will be greatly dependent on your business needs.

If you always dread bookkeeping, ensuring that your financial records are organised can help you reduce the stress that the process entails. When you do it regularly, you will begin to notice that you save time and attend to other obligations. The next time you recreate financial records, make sure you keep essential information handy.

Do You Need A Bookkeeper Or An Accountant?

Keeping meticulous records for the income and expenditure of your business requires a person who is considered an expert at number crunching. Every client has experienced vacillating between choosing an accountant and bookkeeper for their needs especially when there are requirements that need to be complied with. Even when you have already hired someone to assist you with your day-to-day transactions, it can be pretty hard to know exactly where to draw the line. While there are a number of options for you to choose from, the process of choosing is not that easy.

Accounting vs Bookkeeping

Bookkeeping has to do with daily financial transactions including sales, payments, receipts and purchases. A general ledger plays an important role in recording these items, but many small businesses also turn to bookkeeping software for keeping track of various transactions including entries, debits and credits. Bookkeeping involves generating data about the organisation’s activity.

Although bookkeepers do not analyse the financial transactions, they still play a vital role to ensure the business will run efficiently. For instance, recording receipts and payments ensure that correct amounts are paid and received in a timely manner. There are also prescribed procedures that bookkeepers need to follow. They need to see to it that transactions are recorded on a daily basis.

On the other hand, accounting turns data into information. The primary role of an accountant is to verify the data entered, and once data have been verified, they will be used for generating reports, performing audits, analysing the account and preparing financial records. An accountant also ensures that the financial information can be used for forecasts, opportunity for growth, business trends and many others.

The financial data are interpreted as a way of evaluating the business’ efficiency. The accountant will also be the one to decide if there is still a variety of areas and tasks that need work such as management accounting, financial accounting, auditing and financial services.

The key differences between accounting and bookkeeping:

• Financial statement is part of the accounting process, but not the bookkeeping process.

• The process cannot proceed to accounting without taking the first step, which is bookkeeping.

• Bookkeeping does not have the power to disclose correct financial position as it is an accounting job. Accountants help clients see the true and fair view of the business’ financial status and profitability.

• Bookkeeping involves keeping proper records of financial transactions while accounting measures, evaluates, groups, summarises and records transactions.

Bookkeeping and accounting work hand in hand. One cannot function without the other, hence both can be considered inseparable. Bookkeeping is the base for accounting and an important part of the entire process. Every business owner needs both an accountant and bookkeeper to keep the business on its feet.