Business

6 Bookkeeping Basics That You Need to Keep in Mind

Bookkeeping is one of the basics of running a successful business. If you’re into accountancy or just run a company, your bookkeeping skills matter every time and every day. It is for this reason that you must know how to do it very well. If your accounts remain organized, you’ll not have to break any sweat looking for those important bills. Did we say how useful they are when legal discrepancies arise? In this article, we’ll tell you about some basic things that you need to store your accounts and to do your bookkeeping efficiently and effectively.

  1. Cash

Of course, all your commercial transactions involve cash, irrespective of their medium. Since all your business transactions must pass through your exchequer, you must look after this portion very carefully. Ideally, maintain two accounts – one for spending and another for your earnings. When any controversies or conflicts arise, you can easily show these accounts to support your story. It also helps in maintaining the uniformity of payments and in letting you track where your money goes.

  1. Accounts Receivable and Accounts Payable

This is another important part of your bookkeeping strategy. Accounts, as you know, are the records of your sales. Here too, you must keep two books – one for all the material you buy and another for all you sell. Apart from giving you details about your profits, this system can also help you identify the products or services that are in demand. You shall be able to maintain a balance between the supplies and the demand, resulting in an overall efficiency of your business.

  1. Owner(‘s)/(s’) Equity

If you run a company that has a/ more than one owner, you should keep a book for owner equities. This basically records the number of shares each owner has and helps in paying them their dividends. As you know, this needs special care – you don’t want to lose those investors, do you?

  1. Payroll

A payroll is a record of all the money that needs to be paid or has been paid to your employees. You should enter the name of each employee individually and update it each month as you pay them for their services. In case of any miscommunication or failure to achieve a transaction, all you need to do is refer to your records – they should speak only the truth. This is basically for the accountancy division to do. Why don’t you look for some accountants in Melbourne who’ll surely get the job done right?

  1. Loans

Most businesses need loans to buy urgently important commodities. You might need that really important car or that item and you’re low on liquid cash or assets. A loan is a very good solution. However, you must be equally careful in keeping record of loans. Set aside a book for recording your loans. It is not only useful in maintaining a professional record for multiple purposes, you will also be able to refer to the records when settling any disputes with the bank or financial lender, as and if they arise.

  1. Retained Earnings

So, you’ve bought the items, sold them, cleared the loans, paid the owners, transferred the salaries – you can now calculate your own profits. Do it by maintaining a book of records for the purpose where you may calculate the final profit after subtracting all other expenditures. Tabulating your earnings may be a useful personal record for income tax filing and returns. You can also calculate your assets using these records.

Bookkeeping is as important as your sales. They act as records, providing you access to you your expenditures, earnings and all your cash related history. You can use it as a necessary tool to calculate your company’s growth graph, sales, product details, consumer demands, taxes, etc. among many other benefits. You should typically hire an accountant to do your job properly for you. If your books are maintained well, you’ll probably never have to worry about your accounts again! Cool, right?

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