Accounting and bookkeeping share similar goals such as keeping track of income & expenses and collecting financial information for tax registration process and tax returns. It may sound very simple but wait until you get to the heart of it. There is no official way proper way to manage your book. You only have to make sure that your records accurately show income and expenses. Here are three basic accounting and bookkeeping tips to help you understand and organize your books.
Keep your receipts.
The summaries of the company’s income & expenses are considered as the main focus of the accounting process. However, these documents don’t just emerge from nowhere. Each business sale or purchase should be backed up with a record that contains the date, amount and other crucial information at stake. Your way of storing receipts may range from slips that are stored in a small box to an innovative cash register that is linked to the computer. Select a system that works best for your business requirements. The more expenditures and sales your company makes; the better your filing system should be.
Set up and post ledgers.
The ledger is a summary of expenditures, revenues and other things that you are tracking. These summaries can be used to answer detailed financial queries about your company (e.g. whether you are making profit & etc.).
You can start with a hand entry system by getting ledger pads from office supply stores. You can also buy an accounting software program that generates its own ledgers as information is being entered into it. Today, experts recommend that you use software to keep track of your books such as Quicken. As soon as you have entered daily or monthly numbers, the software makes it easy for you to prepare financial reports conveniently.
Draft basic financial reports.
These reports are crucial because they bring together pieces of financial data about your company. While the income ledger may tell you that your firm is bringing loads of money for the year, you will have no method of determining whether you have actually made profits without measuring income against expenses. Financial reports can integrate data from ledgers and turn it into an image that shows a bigger picture.