Best Bookkeeping Practices for Small Businesses
Many small businesses, startups, and entrepreneurs are faced with hiring the right person with the proper knowledge and skills to handle the accounting and bookkeeping of their business. This leads to incomplete disclosures. A serious business owner must properly keep their financial activities in order to meet government, accounting and legal requirements. Moreover, with the right information, decision-makers are able to make better choices. The more organized your files are, the more useful they will be for decision making for a long-term period.
Whether you are a new startup, an established business, or need to do bookkeeping for your business, the best bookkeeping and accounting services companies can help you efficiently manage all your bookkeeping and keep books of all your accounts.
Keeping accounting books: what are the advantages?
Presented as a compulsory activity, the keeping of accounting books is, however, a great advantage for companies.
By keeping the books of account effectively, the company is in good standing with the law and also with the tax authorities.
The accounting books kept correctly and above all up to date allow precise control of accounting activities by a consultant or an accountant if necessary. If there are contradictions on the accounts, the accountant who has done this must give tangible explanations of the risks of being subjected to severe penalties.
Up-to-date accounting books make it possible to know the financial health of a company from its creation to the present day. The accounting books then become documents which greatly assist in the decision for financial security and the development of a business.
What is the benefit of bookkeeping?
Beyond being compulsory, keeping accounting books is a real advantage for companies since it allows accurate control over bookkeeping and accounting activities. Bookkeeping provides an accurate picture of the financial health of a business or organisation, from its beginning until now. In this way, you will be able to analyze the evolution of finances over the week, month and years.
Are you wondering whether you should keep the accounts of your business to any accounting firm?Keeping your accounts well is above all, managing your business well. Any business owner must know what he owes, what he is owed, what he has gained or what he has lost.
Keeping your accounts well is also a challenging exercise (bookkeeping is based on strict and complex rules) as well as time-consuming.
Is bookkeeping compulsory for a business?
Each business or company can use a payroll software or an online paystub creator for their staff. It is important to keep accounting books in order to record the accounting transactions carried out during the year. Maintaining financial records and supporting documents is mandatory if you are operating a business. At the time, shareholders, regulators, and other business owners faced many challenges in bookkeeping and accounting whether you want to process your VAT declarations or your company’s payroll declarations.
Bookkeeping for Small Businesses
Bookkeeping is the process of maintaining all incoming and outgoing money into different classes of accounts and entering them in the general journal. The general journal records, chronologically and continuously, all the economic operations carried out by the company during a period often called the financial year.
Making an accounting entry amounts to recording at least two movements: a debit and a credit in the general journal. Note that in accounting, in the bank account, a collection is recorded on debit and disbursement on credit. Everything is based on a fundamental principle of double-entry accounting. That is why, there is always at least one debit entry line and at least one credit entry line (but there can be multiple debit lines and only one credit for the same operation, or vice versa).
For the same entry, the sum of the entry lines recorded in debit must be equal to the sum of the entry lines entered in the credit. In accounting terms, this indicates that the entry is “balanced or balanced.”
Set up an accounting bookkeeping system
Good bookkeeping helps to be well organized as a business. But to have good bookkeeping, you also need to be well organized! There are various approaches:
- single-part accounting : each transaction is only recorded once in the “income and expenditure journal”. This approach may only be suitable for a very small organization.
- Transfer accounting : protected by copyright, such a system uses carbon-backed checks. The details that are written there are automatically copied and then archived. This approach is often outdated since it requires payment by check.
- double-entry bookkeeping : each transaction is recorded twice, one amount is charged to the credit account and another to the debit so that everything necessarily balances.
- computerized accounting : everything is done automatically, it’s fast, easy and efficient. This is obviously the method popular with the vast majority of companies.
Bookkeeping for the self-employed
As a self-employed person or a small business, you’re probably wondering what bookkeeping is all about? Is it possible to do it easily on your own, or should I entrust it to an accountant? In the following, we explain the basics of bookkeeping, why it is useful, and suggest some tools so that you can do it quickly and on your own.
The self-employed person is required to have accounting entries in the form of a monthly and cumulative register for income and expenses, which includes the following supporting documents:
- Sales invoices
- Invoices for professional expenses
- Bank statements
- The checks
- Commission statements or deposit slips, and more generally any document likely to justify the professional expenditure.
Outsource the bookkeeping of your business?
It can be a great idea. The expert accountant of the company can then take care of the day-to-day management of accounts, expenses and financial transactions of your company. There are many service providers who will take care of the bookkeeping, accounting, Payroll and taxation.
Outsourcing your bookkeeping allows you to:
- comply with accounting and tax rules;
- reduce the costs of the accounting function;
- respect the deadlines for administrative and fiscal declarations and avoid additional costs linked to delays;
- save time to devote yourself entirely to your job;
- benefit from management indicators to better manage your business.
Utilities of good bookkeeping for any business:
Keeping up-to-date books regularly and efficiently is essential for any growing business. Not only does proper bookkeeping not only meet the requirements of the authorities and make the appropriate payments in a timely manner, but it also allows you to:
- Immediately detect inconsistencies and deviations.
- Manage cash flow (liquidity)
- Avoid errors and loss of documents.
- Know the performance of your business in detail and in real-time
- Ensure good business management and make informed business decisions.
Can I do the bookkeeping myself?
Thanks to accounting software, it is possible for a self-employed person or a small business to complete the bookkeeping themselves. However, by calling on a qualified accounting technician, you will save time and limit the risk of errors.
How to do your bookkeeping by yourself?
As a self-employed person or a small business, using accounting software is the easiest way to do your bookkeeping and accounting on your own, at low cost. With online accounting and bookkeeping software like eBetterBooks, all you have to do is make transactions (bill your customers and enter your expenses) and the software takes care of generating the journal entries for you. The best advantage of this software is to save time, money and limit the risk of errors.
Why hire an accounting technician for bookkeeping?
Good bookkeeping helps ensure the success of your business by providing a clear understanding of its financial situation. By calling on a professional, you will benefit from impeccable service and save time.
By hiring an accounting technician rather than dealing with an accountant year round, you will save more. An accountant will do the audit at the end of the year and help you complete your taxes.
Whatever type of bookkeeping is chosen, the system must be reliable, precise, consistent, easy to use and understand, in order to allow easy access to the necessary information at any time. Procedures for checking the accounting entries must be put in place, and first of all the bank reconciliation which makes it possible to compare the bank’s entries with those recorded in the accounts. It is carried out at least once a month upon receipt of the bank statement.
Good bookkeeping certainly makes it possible to meet legal obligations, but it is also an essential management tool for any business or company. By regularly following your accounts and all the financial transactions, you can track the performance of your business in detail and in real time. Hence it would be possible to compare them with the results of past periods, to make forecasts and to make informed decisions.