| Bookkeeping is normally performed by a bookkeeper; | | | | usually processes it, analyzes what's there, and |
| you shouldn't confuse bookkeeping with accounting - | | | | produces a monthly financial statement that helps you |
| because they are two very different things! Most | | | | get a better idea of where you stand. |
| times, the accounting process itself is done by an | | | | Bookkeeping doesn't contribute directly to your profits - |
| accountant - accountants create reports from the | | | | no one is going to pay you to do your books - there |
| records of the company itself. These records are | | | | are numerous reasons why you should make |
| usually prepared by a bookkeeper. | | | | bookkeeping a top priority. |
| The most common methods of bookkeeping are | | | | - If you're going to be relying heavily on outside |
| single entry and double entry systems. These are | | | | financing, you're going to need detailed, and accurate, |
| seen by most people as 'real' methods of | | | | records of all of your businesses finances. Lenders |
| bookkeeping, but don't get overwhelmed - any | | | | and investors alike need this information to measure |
| process that involves keeping the records of a | | | | how much risk they're putting into this, and if you don't |
| business's financial transactions classifies as | | | | have the information, you won't get the money. |
| bookkeeping. | | | | - At the end of the tax year, when you go to figure |
| Many small businesses tend to neglect their | | | | out how much you owe the IRS in taxes, you need to |
| bookkeeping, feeling that it's more important to be out | | | | look at an accurate assessment of how much you've |
| of the office generating new sales then sitting inside | | | | made. This can't be done without proper bookkeeping. |
| adding credits or debits to a sheet, or setting up what | | | | Moreover, you need to be able to show proper |
| they see as an unnecessarily complex bookkeeping | | | | receipts to verify information regarding tax deductions. |
| system. | | | | If you don't have this information and you get audited, |
| Don't fall into this trap - don't think that bookkeeping is | | | | you can suffer huge fines. |
| something you can ignore, because it's certainly not. | | | | - Looking at your books is like going to the doctor for a |
| Appreciating how bookkeeping really influence your | | | | checkup. With an up to date and accurate ledger, you |
| business can make it more of a priority in the future. | | | | can see who is past due on payments, who has |
| Bookkeeping is simply the recording of your business's | | | | outstanding credit, what is owed to you, and what you |
| financial transactions. Bookkeepers basically keep | | | | owe - right there. The financial reports that come from |
| track of all things dealing with the finances, including | | | | good bookkeeping help you keep in line with a budget, |
| receipts. Recording the entries chronologically, they | | | | judge what you're grossing in income, and will help you |
| make sure that all cash transactions, sales, purchases, | | | | determine how healthy your business is, financially |
| and more go into a journal, or ledger. | | | | speaking. Without it, you have no way to anticipate |
| This information then goes to an accountant, who | | | | any cash flow issues. |