The fundamentals of bookkeeping is at the heart of all your financial statements. You won't be able to maintain track of your business’ finances or prepare management reports if you don't do basic accounting.
If you want your accounts to balance at the end of the financial year, you must keep track of everything you make and spend. It may be something you do alone at first, but as your business grows, it is beneficial to hire a professional to assist you to concentrate more time on your long-term aims and goals.
In this blog, we'll look at the phrase "bookkeeping" and the significance of the process. We'll also cover some important pointers for business owners who want to do their own bookkeeping.
What is Bookkeeping?
Bookkeeping is the process of documenting and arranging a company's financial transactions, and a bookkeeper is a person in charge of it.
Bookkeeping is the most common approach for business owners to determine whether or not their business is profitable: keeping track of your numbers allows you to see financial problems early on and fix them before they become full-fledged disasters.
Bookkeeping also aids in the identification of profit-generating opportunities that might otherwise go unnoticed if financial records were not presented in a clear and easy-to-understand format.
What is the difference between Bookkeeping and Accounting?
Many people believe that these terms are interchangeable, however, this is not the case. Although bookkeeping and accounting are comparable, bookkeeping establishes the groundwork for accounting, whereas accounting focuses on interpreting the data that bookkeeping gathers.
Why is Bookkeeping important for my business?
Bookkeeping aids in the budgeting of your business, the preparation of tax returns, the organisation of your firm, and much more. If you want to keep your finances in order, you shouldn't ignore them.
Here are some of the most fundamental reasons why bookkeeping is crucial for your business.
- Assists You in Making Accurate Budgets;
- Ensures that you are tax-ready;
- Organises and maintains records;
- It's Easier to See Business Goals;
- Compliance with Government Regulations.
Can I handle my own bookkeeping process?
If you want to manage this process yourself and are already familiar with the fundamentals of bookkeeping but need some guidance, here are a few bookkeeping suggestions to keep your books up to date:
Separate your personal and corporate finances.
It's critical to have a clear line between your personal and corporate expenditures and finances. Combining the two can be confusing and time-consuming.
If you don't already have separate bank accounts, we highly advise you to open one as soon as possible.
Set realistic deadlines
Set firm deadlines for both yourself and your clients' payments to service providers and contractors. If they are past due, you can pursue them before they have a big impact on your cash flow.
Additionally, making payments to HMRC on time is also critical in order to avoid penalties.
If a customer frequently fails to pay, you may want to rethink how you charge them or perhaps make the hard decision to stop dealing with them altogether.
The importance of petty cash receipts
Maintaining correct records of your petty cash fund should not be taken lightly. You must keep some form of record every time you use small cash in order to keep track of how much you've spent.
Your petty cash account should be reconciled on a regular basis. You'll be able to notice any discrepancies and know where your money is going, lowering the chance of theft.
Hire a professional bookkeeper or an experienced accountant
Remember that there are specialists in the field of account management that have the knowledge and expertise to guarantee that this vital aspect of your organisation is properly handled.
You may free up time to focus on operating your business by outsourcing your accounting, and you can profit even more by requesting frequent management account information to assist you to do so more successfully and with the correct information on hand.
Bookkeeping is a hard procedure, and if you don't hire an experienced accountant to help you with it, it may cause major issues with your business' finances and overall efficiency. At Persona Finance, we have a team of expert accountants ready to handle your bookkeeping responsibilities with the highest care and precision. Please contact us now at [enquiries@personafinance.co.uk] for additional information on our accounting services.
