Small business book keeping not only involves preparing financial records during tax season, and payroll on Friday, but it is more about maintaining proper records to save money and identify waste, fraud and theft. Thus, the reason hiring professional accounting staff is so vital, instead of relying on inexperienced employees to handle these tasks.
Accounting errors include committing basic mathematical errors, recording business data incorrectly, and not documenting expenditures and income. Accounting experts here, https://www.keepingyourbalance.com/ say organization is critical.
Good Record Keeping Can Always Save You
Every business generates mountains of paperwork, also referred to as source documents. Most of this paperwork will provide critical backup to entries made in your accounting system. It’s important right from the beginning that business owners track, record and store these documents, but in many cases, source documents are misplaced, which can have a direct impact on your taxation purposes.
One of the biggest issues is allowing inexperienced staff handle accounting requirements. They probably will know enough to hang on to the paperwork, but not enough to understand what controls follows. Every company has documented systems for filing and recording source documents, like bills, receipts, and bank statements, and if yours doesn’t have this type of system, it may be time to consider a book keeping service.
Organizing And Recording Is Vital
Good organizational habits translate into keeping receipts. You’ll undoubtedly have an array of expenses, and keeping receipts is just accounting 101. Additionally, using commercial credit and debit cards, making sure any transactions are recorded, and accurately accounting for expenditures like petty cash on the exact day as you incurred the expense, and not combining personal and business assets are all necessities.
The basic purpose of any book keeping system is to record all transactions of a business. So what type of book keeping system should you get? There are many choices today that include a myriad of computerized software programs, and it can be difficult to decide which is best.
Believe it or not, many people start out with a manual journal and ledger. It’s also the least expensive solution, but the most time consuming. Most business owners only benefit from the low cost because the time spent could have been served on other profit-generating activities. Not only will it take you longer, but handwriting and reconciling invoices, receipts, and other paperwork becomes overwhelming, and that’s when the mistakes begin to occur.
As you can see, there are many considerations to take into account when it comes to accurate accounting measures. Sure, it’s good to have a lot of options, but you have to wonder if taking on this responsibility is really smart.
Planning For Success
If you’re a business owner, you have to get a grip on the basics of accounting because it’s crucial to success. And if you’re wearing too many hats, and multi-tasking, it could be causing inefficiency, so having a professional bookkeeper or accountant will help keep you abreast of financial responsibilities, not to mention, keep your books accurate.