Bookkeeping and record keeping are two things that most people take for granted when it comes to running a business, but these functions are absolutely vital to the success of your company. Whether you’re an accountant or an entrepreneur who hasn’t gotten around to hiring bookkeepers yet, it’s important to understand why bookkeeping matters and how it impacts your business. You don’t need to make bookkeeping your top priority when you start out, but if you want to stay in business for the long term, it’s imperative that you know how to do basic bookkeeping in your company.
What Is Bookkeeping?
Bookkeeping refers to the process of maintaining financial records for a business. Bookkeepers are typically responsible for making sure that any transactions made by the company (e.g., purchases, sales, salaries) are documented so that accurate financial reports can be compiled. They may also oversee payroll and generate various forms related to taxes and other government requirements.
What are the benefits of keeping records?
Records will help you maintain a comprehensive understanding of your company’s financial situation. You’ll be able to quickly make financial decisions, identify trends in your business, and forecast future needs. Plus, keeping good records can reduce the need for lengthy IRS or state audits that could take a toll on your business.
What are some common mistakes to avoid?
Bookkeeping is the process of recording and maintaining records. Records are usually financial transactions that are completed on paper or electronically, such as bank statements and vendor invoices. These records tell a story about the finances of your business. You should always keep at least three years’ worth of these records in case there are any discrepancies or issues with the IRS, but you may need to keep longer depending on what type of taxes your business has to pay each year.
How do you set up your books?
Books are more than just a system, they’re your company’s memory. Whenever there’s an expense or purchase, the books will show how much was paid and what it was for. This allows you to analyze the past, plan for the future, and communicate about what you’ve done to others on a regular basis. So whether you think it’s necessary or not, keeping books can help you make better decisions in the long run!
Where can you find help with your bookkeeping?
Bookkeeping can become complicated process, and when you are juggling so many other responsibilities it can be easy to let things fall through the cracks. Take a look at our list of free and low-cost bookkeeping resources to get started:
Where do you store your business records?
Your best option is to choose a commercial-grade cloud-based solution. Cloud-based solutions offer the added benefit of storing your information in more than one place and are accessible from any device with internet access. With an online accounting program, your financial data will always be available when you need it–and with much less risk and hassle. Plus, many programs will provide data backup services to ensure that if anything were to happen to your hard drive or computer, you would still have access to the information that you need.