What is a bookkeeping and why do I have to do it?

Bookkeeping is a part of accounting and is represented by daily records of every financial transaction that occurs within your business. Bookkeeping includes all invoices you create or receive, receipts from purchases, in general – all sales and payments. In the past, people used to record their financial transactions in very simple way by writing them down into a book straight away. Today bookkeepers (accountants) use either the single-entry or the double-entry bookkeeping system.

 

Each time a transaction occurs, a document should be produced. Sales and purchases are normally recorded on invoice or receipt. In case of lodgements (deposits) to your or someone else’s account in cash, you should receive a deposit slip. Cheques are also part of a bookkeeping, they are written to pay money out of the account. In summary all your business transactions should be either recorded on spreadsheet, an accounting software or a multi column journals.  Just a basic knowledge of excel will save you a great deal of money and time, while off the shelf bookkeeping software is costly and sometimes hard to understand, unless you have a basic accounting knowledge.

 

Particularly, many small businesses would like to use a multi-column journals, it basically  the hard copy of an excel spreadsheet version, which can be found in a small stationers. Each column is dedicated to different type of transaction, for example – first column may be for sales, the next one for cash transactions etc. Some people prefer to keep these in separated books. This way you will keep everything tidy and sorted. It is very helpful to write everything down straight away and avoid potential problems with losing documents or forgetting details.

 

You can create a balance column too with credit and debit transactions. Once they are totalled (separately), they should agree. If they do not, it is an indicator that mistake was made while recording transactions.

 

Please, do not hesitate to contact us with your requests and we will provide all the support you need to make your bookkeeping the best as it can be.