What Does Bookkeeping Entail?

Bookkeeping is an essential component of doing business these days. Without it, you would find it hard to avoid penalties come tax season. So, if you want to ensure that your business prospers and doesn’t get into trouble with the tax department then you should hire a bookkeeper as soon as possible. There are various tasks that fall under the umbrella of Bookkeeping services. Let’s take a brief look at them.

Bookkeeping services

Recording of Financial Transactions

Bookkeepers deal with the recording and maintenance of all the financial transactions made by the business. This includes preserving receipts for sales and purchases made during a set period of time. It is the job of the bookkeeper to track down all the receipts and record them in a systematic manner. This data collection done by the bookkeeper is going to help in the development of financial statements later on. Moreover, aside from the receipts, there are other transactions that need to be recorded as well. For instance, payments made to vendors, loan repayments, bills and other operational expenses all need to be recorded by the bookkeeper.

Balancing the Books

Balancing the books is another important aspect of bookkeeping. It requires the bookkeeper ensuring that the assets of the company always come out to be equal to the liabilities and the business’s equity. In order to balance the books, the bookkeeper generally has to check and recheck all of the financial transactions multiple times over. They also need to keep an eye on the different cash accounts of the business and make sure that the accounts don’t show any kind of discrepancy.

Creating Financial Statements

Bookkeeping also involves the creation of financial statements. These are created by entering all of the data that has been collected by recording different financial transactions. These financial statements are needed by the accountant for creating financial reports for business management. Each financial statement focuses on a specific aspect of the business’s finances. For instance, there would be separate financial statements for revenue earned, cash flow and expenses. Some bookkeepers use the help of computer software for the preparation of these financial statements.

Shoebox Bookkeeping is a provider of online bookkeeping services in Sydney businesses. If you are looking for a trust-worthy bookkeeping service then we can help you out.

What is Double Entry Bookkeeping?

Bookkeeping and accounting are critical to the success of any business. Both processes ensure that you are on top of your finances and are able to make informed decisions regarding your business’s future. Companies usually hire bookkeepers as well as accountants to handle the financial matters of business. The task of the bookkeeper is to simply record and organize the receipts and keep track of invoices and bills. It is the duty of the accountants to make sense of the data collected and organized by the bookkeepers. They turn the raw data into business reports which are then used to determine the company’s financial standing. There are various concepts used by bookkeepers and accountants to perform their jobs correctly. One of these concepts is double entry bookkeeping.

What is Double Entry Bookkeeping

How Double Entry Bookkeeping Works

Double entry bookkeeping is one of the fundamental methods of recording business entries. It basically means that every transaction has to be entered in two different accounts. For instance, if the company is making a sale then the transaction would be debited to both the company’s cash account as well as to its revenue account. On the flip side, whenever the company borrows an amount from the bank, the amount is to be entered into the cash account of the company and also credited to the company’s accounts payable. In double entry bookkeeping, no matter what transaction is entered, the assets of the company always equate to its liabilities plus equity. Here, assets of the company are the cash account while the liabilities and equity are the accounts payable and revenue account respectively.

Benefits of Using Double Entry Bookkeeping

There are various benefits that double entry bookkeeping offers to bookkeepers. For starters, it makes it a lot easier for you to locate data entry mistakes. Since the transactions are being recorded in two different accounts, any mistakes made during entry will become evident when the assets don’t equate to the equity and liabilities of the company. Moreover, it also provides a comprehensive record of all the transactions made by the business and their relative impact on the business’s financial standing.

Shoebox Bookkeeping offers online bookkeeping services to businesses all over Australia. Give us a call if you want to try out bookkeeping services for your business.