5 things you need to know about bookkeeping for startups and small businesses

The aim of every commercial business is to make money or precisely speaking, to earn profits. Money is the blood of business and often refers to cash at hand or in the safe, cash in the bank, stocks held for sale and sales made on credit (debtors). On the other hand, a profit is the reward to the owner for doing business.

Therefore every business owner or manager needs to be on top of the money affairs of his or her business in order for such business to make the most profit for them and if its making losses then such business should be able in the least, to survive the economic turbulence.

In order to know that your business is making the money or establish that it has earned the profits, you need to practice proper bookkeeping. This is the systematic recording and organising of the financial activities of a business, and is used to ensure that all transactions of the business are correct.

Basic principles of bookkeeping requires that although there are many accounting documents, the following basic documents are a must have in the business namely receipts, vouchers, invoices, bills (supplier invoices) and journals. For more information on these and other documents, please consult your accounting professional.

Bookkeeping is the systematic recording of every financial transaction of a business which  is important because when the transactions become too many there is a tendency to forget some. Bookkeeping as a system needs to be set up according to the uniqueness of each business and its needs. Before set up, the consultant accountant first designs the logical flow of operating events using data flow diagram.

Bookkeeping can be set up to operate on manually written books or where possible a computer. Therefore it does not mean that you cannot set it up without having a computer. Either way, basic documents such as receipts and vouchers will be used.

A good system of Bookkeeping enables every business owner on a daily basis to know how much they have received in sales, how much they have paid out in purchases together with other expenses and how much cash is actually available.

Once set up, the bookkeeping system enables the delegation of certain aspects of the business to other people(the workers) leaving the owner time to focus on the bigger picture of the business and concentrate on planning and managing growth without losing any touch on the ground.

A good system of bookkeeping can expand to incorporate new aspects which come with growth of the business

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