/Basic Bookkeeping 101 for small and medium sized businesses

Basic Bookkeeping 101 for small and medium sized businesses

Every business has to have a book keeping system. Think of it as a process through which you store all your bills, contracts, invoices and other documents related to the business. If you’re hoping to track the flow of money in your business, then it’s time you get immersed in book keeping. You can follow the money you spend and the payment you receive. If you are a retail business, everyday you deal with so many customers that it can be hard to keep track of what’s being sold out and how much finance is coming into the business. Keeping the books makes you aware of your business’s financial situation and you can use it as proof of paying all the required taxes, if even you fall into trouble.

Bookkeeping System

You’re not the only one who has to keep the books and there are variety of systems all of which you can use.

–          Double Entry Bookkeeping: This is most basic one and you can pick it up in any college level accounting class. Every transaction will be recorded twice. One is account credited with a given dollar amount, while the second account is debited by an equal number of dollars. This is good system, but you’ll have to sit down for a few accounting classes before you can master it.

–          Commercial Bookkeeping System: This bookkeeping is a packaged system with instructions and forms to use. You’ll usually get them at a stationary.

–          One Write System: These are copyrighted systems that are set up by carbon backed cheques. When you write information on a cheque, it is transferred to a record system.

–          Computerized Systems: This one is probably most popular. There are many types of software available to set up a digital bookkeeping system. Most of them are not difficult to use and give you easy and quick service in keeping the books. It’s real helpful in getting daily financial statements. There are many cheap and expensive types of software. You don’t want one which has a bad user interface or is terrible at presenting data. Pick one that suits your business’s capacity. Read up on reviews and figure out one you’ll like.

–          Single Entry Bookkeeping: This is a simple method of bookkeeping where you record every transaction once as an income or expense. It pretty easy and doesn’t require much training.

Which do you Use?

Choosing a bookkeeping system ultimately depends on you. In the end, you must have a system which is simple to use, easy to understand, reliable, precise and consistent. It should be able to give financial statements on a timely basis on the health of your business. Pick one which you are able to handle. If you’re a novice, you can start with Single Entry Bookkeeping and move on to a computerised system which is easy to use.

Depending on how your business runs, be sure to set aside some time during the day or week to input the necessary data. Never miss out on it. Keeping track of your finance is a delicate process, so get to it!

Original Source

Tristan, a graduate in Mass Media and a former employee of a travel & lifestyle magazine, carries the only luggage of his passion of writing with him. When not at work, he's buried in a book or working on his next blog.