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Facts about Bookkeeping for Small Businesses

Facts about Bookkeeping for Small Businesses

From taxation to profit and loss analysis, bookkeeping is an essential activity irrespective of business size. While giant businesses employ professional services such as, small businesses often neglect this aspect and bear the brunt.

If you are a business owner who is clueless about bookkeeping for small businesses, this article is for you!

What Are Bookkeeping Services?

The process of recording, storing, and retrieving all the financial records about a specific business, non-profit organization, individual, or any company is termed bookkeeping.

Some of the common transactions which are an essential part of bookkeeping services are:

  • Recording all the raised invoices
  • Keeping track of all the bills issued to the supplier
  • Billing for the clients against the services rendered
  • Processing employees’ payroll
  • Keeping a record of all the accounts receivables
  • Maintaining record for all the accounts payable
  • Documenting receipts from customers
  • Financial reporting
  • Recording depreciation

Bookkeeping Vs. Accounting

Bookkeeping is largely concerned with keeping the records of all the financial transactions while accounting is concerned with analyzing and summarizing financial data.

The job of a bookkeeper is limited to recording all aspects of the accounting process while an accountant is liable for interpreting all the recorded financial data, classifying them according to federal laws, analyzing them, and reporting to the management to aid their decision making.

What Are the Various Types of Bookkeeping Services?

Single-entry systems and double-entry systems are the two types of bookkeeping systems adopted by businesses across the world.

The single entry system records the cash sales and business expenses when incurred. It is a simple and uncomplicated bookkeeping system. Bank statements, cash sales journals, and cash disbursement registers are the primary records under the single-entry system.

Double entry is the complex form of bookkeeping where two entries are created. The first entry is in line with a single entry while the second entry is created by tracing the corresponding account to the transaction.

What Is the Common Bookkeeping Software for Small Businesses?

Instead of the traditional system of bookkeeping, small businesses prefer to opt for bookkeeping software because:

  • It makes the process of bookkeeping easy
  • It enhances quick and accurate reporting
  • It helps in streamlining business taxes
  • It keeps a backup of data
  • It helps in better data interpretation

Some of the Common Software Used

  • Quickbooks
  • GnuCash
  • TurboCASH
  • KMyMoney
  • SageX3

What Are the Benefits of Bookkeeping?

Here are some of the benefits of bookkeeping for any business:

  • To pay taxes on time
  • To keep data up to date always
  • To aid the accounting process
  • To help you to budget accurately
  • To set viable business targets
  • To meet all federal requirements

Bookkeeping reveals more about your business finances than you think. It helps in making smarter financial decisions and gives you extra peace of mind so that you can focus on other areas of your business.

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by Marissa Collins //

Opinions expressed by contributors are their own.