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Small Scale Businesses And Bookkeeping

April 11, 2016 0 Comments

Bookkeeping is an important function of a business, be it big or very small. Good bookkeeping practices are a must to maintain an accurate set of accounting books. This, in turn is necessary for one to help him take vital business decisions such as raising capital or going for bank loans. Of-course, it is also needed to know how much money a business is making as profit. Getting the accounting concepts and practices right for small businesses is all about doing simple accounting things in the best way every time. These practices are easy to implement; so, many business owners tend to go for the implementation aspect. Some of the relevant things that need to be looked into are mentioned. Keep all the business and personal transactions in a separate book. Make use of business cards, if possible, in order to segregate business transactions.

All sales proceeds, deposits and all the initial expenses have to be recorded in the business checking account; or else, on a business credit card. Enter in the books even the details of cash-receipts got from customers. It is ideal to store all the cash in a separate drawer and reconcile the transactions account at least once a month, if not, on a weekly basis. Keep track of the personal funds made use of to pay for the company expenses or vice-versa through a single account. Track the reimbursements made to the business owners also through this particular account. This helps one to identify which money was spent by you on the column of business transactions clearly and accurately. Make it a point to reconcile all your bank and credit card accounts on a monthly basis without fail. This practice is a highly recommended one since its benefits go beyond the recommended accounting principles and practices. Whenever your bookkeeper or you decide to reconcile the books, you would get a clear picture of how the funds moved in and out of your bank account every time.

Make it a point to track all the bills under a proper expense account, as far as feasible or possible. Always mention in detail the nature of the expenses in the memo. Accurate covering of the expenses incurred can save a lot of money in terms of taxes. This is due to the fact that many of the expenses may be deductible. Your bookkeepers or CPA may not be in a position to get you those benefits if it is not entered in the right accounts or at least with enough detail to support. Simplicity of business soft wares has made many small business owners to carry out their accounting tasks themselves. This is not always a good idea because without a thorough knowledge of basic accounting principles, one is liable to make errors, for instance, treating a liability as an expense. Many a small business owner enters loan repayments as an expense without segregating the principal amount from interest components. Bookkeeping for small businesses and enterprises is not very difficult.

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