Bookkeeping is one of the most essential parts of any size of the business. As the term suggests, it keeps the record of business finances and everyday money transaction taking place in the business. As a small business, if you’re able to manage your bookkeeping efficiently then well and good. But if you have lots of books to manage and you aren’t able to manage them then you may see your business collapsing soon.
But no need to worry, in this blog, I have brought some useful steps for you to manage your accounting books effectively. Make sure to read the article till the end and learn from it.
Let’s now make a start.
Useful steps to manage your bookkeeping effectively
Follow the given steps if you want to keep your business records in order in accounting book.
Step 1 – Choose a bookkeeping method
Yes, before you start to manage your business bookkeeping, you first have to choose the type of bookkeeping you want to work with. There are two types of bookkeeping available – the single and the double-entry methods. Let’s understand each of them one by one below.
Single entry bookkeeping – as the term suggests, it records one entry for per transaction in a simple spreadsheet. As it is a part of accounting system, single entry bookkeeping record: Taxable income, Tax-deductible income, and many more.
Double entry bookkeeping – in this system, every entry to an account requires a corresponding entry and opposite entry in two different accounts. For example, if you have debit in account then you need equal number of creditor as well.
Step 2 – Systematically categorize your transactions
Now that you’re done with choosing a particular bookkeeping method, start filling entry in it in systematic way. Let me tell you today accounting firms use double-entry bookkeeping system than single one. Well, there are 5 different types of accounts so categorize your accounts appropriately.
Recoding all these accounts in a systematic way, I suggest you to invest in accounting software such as QuickBooks or any other. The software will help you choose the right accounts on the basis of your industry and transaction type.
Step 3 – Monitor accounts receivables
After your accounts set up, you have to keep an eye on accounts receivables. Basically, it’s about collecting money from clients. Usually what happens is that business doesn’t collect payment instantly after delivering the product or service to a customer. And if you don’t pay attention to accounts receivable systems, you may see cash flow problem in the future. So, you accounts receivable systems must include:
- * A well-organized invoicing platform that helps you easily bill customers quickly; and
- * A fast collections system helping you collect late payments from customers
You may face difficulty here if you alone try to perform this step. Therefore, try to outsource bookkeeping services from a renowned firm. A professional online bookkeeper will help you manage the steps involved in billing your clients.
Step 4 – Settle your accounts
The final step here is to settling or reconciles your accounts. Whatever bookkeeping software you may use, the ultimate goal is to reconcile a trial balance sheet. It means the final total of debit and credit must match. The final balance should be equal in the last. It may sound easy but this is very tedious task to perform. Make sure to take professional help. Moreover, accounts reconcile helps you forecast cash flow and plan for future expenses.
In fact, bank reconciliation helps you detect fraud, prevent overdraft, and helps in identify any error occurring in bank record.
It’s a right time to outsource bookkeeping services!
There is no doubt that many small businesses may found above-mentioned steps fun challenging, and for some it is a nightmare. If you come to the second category then the good news is that Kayabooks is here to help you in managing bookkeeping. We at Kayabooks help small business in bookkeeping tasks and manage their business effectively.
Note: If you’re looking for online marketing services, then Curvearro is marketing and website partner of Kayabooks, you can outsource digital marketing services them.
Bookkeeping is most essential part of any business without managing it will cost you a lot. If you are able to manage bookkeeping on your own by following above-mentioned steps then well and good otherwise, get in touch with us to see how we can help you manage bookkeeping at affordable price, save you time, energy, and lifting the burden off your shoulders.