Basics of Good Bookkeeping
As your company continues building up revenues, acquires new assets, borrows money and conducts other financial transactions, you are required to maintain a record of them from time to time and in an accurate manner. This is essential for the success and longevity of your business.
Bookkeeping allows you to maintain your financial records in an orderly fashion so that you can effectively deal with your debts and credits. At the same time it can also help you detect and prevent fraud and offer you essential insights into your finance for better planning. Here are a few basics to help your bookkeeping process –
Maintain copies of all receipts related to your business
This should be done irrespective of the value of the transaction or even if it was posted to a credit card. The small amounts will add up eventually and if you plan of claiming tax a deduction you have to be able to prove why, if required.
Maintain physical or virtual records
During the course of business you have to maintain either manual or electronic registers or ledgers of your expenses, income and cash. You will need to prepare a chart of all the accounts and categories to know your expenses in income. Online bookkeeping software is available for this purpose and also allows you to upload your work online so that you can access it from anywhere and make entries at any time.
When recording your business’ financial transactions you need to do so in an organized fashion. You can do this either manually of electronically. Organize your records based on customers and vendors. This will make things much easier for you when you need to figure out whether or not your clients have been invoiced and if you have received payment or not. It also helps you know if you have received you vendor’s bills and if you have made payments yet.
Differentiate between business and personal expenditures
You have to track and reimburse all business expenses that were paid for with your personal finances. Always keep receipts of these transactions and record them to create a clear distinction between your personal money and business money.
Set a cut–off date for account balancing
This is a good practice if done on a regular monthly basis. It lets you know that your income and expense records are maintained properly, irregularities are checked and it will also helps you find out what your establishment’s profitability is.
Keep track of all cash transaction
To accurately claim all your expenses, you must track all your transactions in your petty cash account. For this you need to save your receipts and your accounts are reconciled every month. If done properly, you can also prevent embezzlement and other forms of financial fraud.
Know what tax forms to file
There is a different tax for a business during each stage of its life cycle – a tax form for starting up the business, State combination form and so on. If you have to pay taxes, you need to know what for.
With companies like KGRN Accounting Associates, you can enjoy the best bookkeeping facilities for you company in Dubai and the whole of UAE.