Factors to Consider on Bookkeeping and Managing Finances for a Business
Bookkeeping also refers to the activity or occupation of keeping records of the financial affairs of a business. Bookkeeping mainly records transactions involving purchases, sales, receipts, and payments by a person or an organization or corporation. The two main methods of bookkeeping are single-entry bookkeeping system and the double-entry bookkeeping system. A bookkeeper mostly records daily transactions of business.
The importance of bookkeeping cannot be emphasized enough, but here are top reasons why this is vital to the health and life of your business. First and foremost, bookkeeping and proper management of financial resources provides a better financial and management of the company. Furthermore, it provides businesses with opportunities of up to date follow-ups and on-time payments. On the other hand, Bookkeeping keeps track on any information and documents to accomplish annual taxes. Through money management, business is also able to compute the tax returns. Besides, the process of reporting the business progress to investors on crucial information becomes easier through bookkeeping and money management. Balance sheet and profit and loss account helps a business to plan its strategies easily and also keep proper records of the business.
For an individual, money management provides security of being in the know of the resources that one have to counter unforeseen expenses including being fired from work, car breaking down and other unexpected expenses. Also, efficient money management helps in reducing stress and conflict. Furthermore, money management helps in generating more money since as a person’s incomes grow, their financial planning will not just involve budgeting so that all the expenses are covered each month, but also determining how to invest the surplus that accumulates above what they spend. In addition, proper money management helps an individual to achieve long-term goals like buying a house and starting a family as well as saving for all the things they hope to do someday. People who properly manage their money are in a better position to meet their needs, for instance, one can pay the school fees of their children as well as meeting the medical bills.
The following are the guides on effective bookkeeping and efficient money management. It is vital to learn how to use the accounting soft wares such as QuickBooks since it contains relative information on how to create financial report, reconcile bank and other financial computation. Another alternative to learning how to use the QuickBooks is to hire a local bookkeeper to provide the services you need, and turn the books over to your certified public accountant for planning and tax preparation at the end of the year. On the other hand, it is advisable to keep personal and business bank account and credit cards separate so as to make bookkeeping much easier.