When it comes to running a business and making it perform successfully, bookkeeping plays a vital role. So what is bookkeeping and why is it important for any business (small or large).
Bookkeeping is a way to record all financial transactions like sales, purchases, payments or receipts. So any financial transaction being recorded by a bookkeeper falls under bookkeeping. Bookkeeping is an important exercise as it helps in taxation, manage expenses and cash flow, indicates if business is making profit and is growing as desired.
Maintaining transactions of all kinds can be a tedious task but it definitely is important and saves a lot of year end effort for any business. Here are some easy tips on how you can plan bookkeeping exercise if you are a beginner:
- Record on daily basis – Maintain a ledger to record every transaction on daily basis. It is up to you how you plan to record-keep and different people have different ways to do the same. You can use an accounting system or hire someone for this purpose.
- Find a bookkeeper – You can find a good bookkeeper in market or in your family itself. A local student who is looking for an internship or a teenager in your family is the perfect bookkeepers for you. You need not pay them huge sum and so they become affordable for any business.
- Check the checks – A check is as good as cash. Do not overlook them. When you sign a check, ensure that the signature is such that it cannot be duplicated by anyone. You must always review any cancelled check before your bookkeeper gets to look at it. Never leave a cancelled check in a file or cabinet without scrutinising at it.
- Bank statement – Get a bank statement at the end of every month. Validate the transactions in your bank account against your daily ledger. This is an effective way to ensure that all records are clear and in place and your money is being tracked correctly.
- Audit – Retain invoices or bills or checks every month. You should be able to trace back every monetary transaction and map it against the invoices or bills. These should be retained year on year. If there is a need to reconcile records, these invoices will help you in the same. This is also a perfect way of tracking things for taxation purpose. Try and maintain a separate bank account for any personal transactions. This will keep your business records clean.
Remember, bookkeeping may sound a simple process but it really is a lengthy and an important part of your business. The job of a bookkeeper is definitely not simple as accounting of every penny at the end of month, year and during audits matters for every business irrespective of its scale and size. Bookkeeping services in Malaysia extend assistance to all businesses invariably of their sizes ensuring that the records are maintained appropriately.