What is Bookkeeping?
As a beginner, bookkeeping can be overwhelming, but it doesn’t need to be. We’re exploring a few things you need to know to efficiently navigate your business’s financial help. Bookkeeping is the record keeping of your business’s financial transactions. Your bookkeeper records the financial transactions. Your accountant then interprets, summarises and reports on the data given by the bookkeeper. Your bookkeeping function is essential as it keeps track of all the funds coming into your business and funds that leave. There are five basic account types your bookkeeping function needs to have set up. They are:
Revenue/Income – Any money your business brings in by selling products or rendering services.
Expenses – All the money that leaves your businesses.
Assets – Anything of value that your business owns, like money, resources or furniture.
Liabilities – These are any debts or obligations your business has accumulated.
Equity– This is what you get once you subtract your liabilities from your assets. These accounts ensure that your bookkeeping function is continuously updated and well-informed about the financial matters of your business. Your bookkeeper needs to stay on top of things for your business to run smoothly.
Some Bookkeeping Terms You Need To Know
Some bookkeeping terms might fly right over your head when you hear them for the first time. Let’s help you clarify some things:
Accounts payable– You must quickly pay this money owed to your creditors.
Arrears– This is overdue money. It can be owed to you or money that you owe. We do not advise your business to go into arrears for any accounts. That can lead to the whole business experiencing financial strain.
Creditors– People/businesses your business owes money to.
Debtors– People/ businesses who owe your business money.
Financial statements– Records that show how well your business is doing and the value of your business.
Income statements– This outlines your business’s financial activity over time and records the net profits and losses.
Journals- Where your bookkeepers record your daily transactions.
Turnover– The value of services rendered or goods sold over a while. We could go on all day explaining all the bookkeeping terms you need to know but your head will be spinning by the end. This list is just the tip of the iceberg. Hiring professional bookkeepers will ensure you don’t need to know these terms. Although, as a business owner, having a basic understanding could be helpful.
Hiring A Bookkeeper VS Doing It Yourself
Some business owners might not have a knack for the financial aspects needed to run the business. That is completely okay, as you have the option to outsource your business’s bookkeeping function. If you think you could save some money and do it yourself, please think again. Unless you’re a qualified bookkeeper, it’s not recommended that you take on that responsibility. Bookkeeping services rendered by professionals like My Personal Accountant, will ensure that the bookkeeping function is handled correctly. You are eliminating the room for error and saving money in the long run. By outsourcing the bookkeeping function, you will have more time to invest in growing your business as a business owner. The more the business grows, the better it is for everyone involved. If your books are currently behind or you’re still storing receipts in a shoe box, it’s about time you gave the professionals a call. My Personal Accountant in London will happily take up the task and ensure expert bookkeepers carry out your bookkeeping function with years of experience in the field. Do not hesitate to contact us today.
