Running a business requires some serious multitasking. A business owner has to juggle product development, marketing, recruiting and many other aspects of the business.
Accounting and bookkeeping services are an aspect of the business that is usually an afterthought. Business owners are so busy with the product development and marketing that they don't pay enough attention to accounting and bookkeeping.
However, it is these services that are crucial to the success of a business. Without keeping track of the financials, an entrepreneur will be in the dark about the state of his business.
Bookkeeping involves keeping track of the daily financials of the business and accounting measures and processes this information. Both these actions go hand in hand. So, what really goes into these processes and what are the 10 essentials questions a business owner needs to ask about them?
Chart of Accounts is an accounting system that helps keep track of the company's income and expenses. Although the exact details will vary from company to company, the basic principle remains the same. Chart of Accounts can also be thought of as an indexed list of accounts that give a clear picture of the categories and sub-categories that will be impacted by the financial transactions.
However, it is these services that are crucial to the success of a business. Without keeping track of the financials, an entrepreneur will be in the dark about the state of his business.
Bookkeeping involves keeping track of the daily financials of the business and accounting measures and processes this information. Both these actions go hand in hand. So, what really goes into these processes and what are the 10 essentials questions a business owner needs to ask about them?
1. What are the Basics of Bookkeeping?
Bookkeeping is all about recording everyday financial transactions. Everything from sales to expenses, whether it is cash or bank transfer needs to recorded accurately. The complexity of this depends on the size of the business. A small business will mostly have simple transactions and the complexity grows as the business expands.2. What are the Basics of Accounting?
Bookkeeping provides data which has to be processed into meaningful reports by accounting services. These reports give information about the financial health of the business and help the owner make important decisions. Accounting also takes care of paying the taxes on time.3. How Do I Set up an Accounting System?
The first question asked by a lot of business owners is, "How do I keep accounting books for my small business?" When a business is in its initial stages, it is better to keep the accounting simple. An accrual-based system will be ideal for this. This system reports revenues in income statements when they are earned. As your business grows, you can slowly expand your accounting system and use complex software.4. Should I Create a Business Account?
Every business needs to have a separate business bank account. Personal expenses should never be mixed with the business expense. It can lead to serious issues down the line, especially during taxation. This account should be integrated to your accounting software. Opt for an online account to make things simpler.5. What is Chart of Accounts?
Chart of Accounts is an accounting system that helps keep track of the company's income and expenses. Although the exact details will vary from company to company, the basic principle remains the same. Chart of Accounts can also be thought of as an indexed list of accounts that give a clear picture of the categories and sub-categories that will be impacted by the financial transactions.
