Basics of Bookkeeping for Small Businesses

Running your small business is a big task. Whether you have a big team or you are the sole operator, there are thousands of tasks that must be done to keep your business up & running. Bookkeeping is one of them. Bookkeeping is a task that no business can live without. It’s one of the most important parts of business operations and helps in tracking and maintaining reports of all the financial transactions of a business.

The article describes about the basics of bookkeeping and why you should follow them.

Expenses and Revenues:

It’s essential to know the cash flow (in and out) in your business. This can be performed by monitoring it through proper documentation. All the records should be maintained through journals. It’s a method that tracks all the transactions as credits and debits.

Inventory: 

It is used to maintain all the records to prevent any kind of misplacing and stealing of data. Date of purchase, purchase price, stock numbers, and date of selling, sold price etc. are some of the metrics included in the inventory.  It’s a method for tracking items properly to know about the popular items and business trends.

Payroll Expenses:

Probably, it’s one of the biggest costs for both small and big companies. Therefore, make sure to track and have a proper record of the expenses and always pay your employees on time. Payroll is important for tax purposes.

Company returns:

It’s an important term if you are a limited company. You need to file your annual and confirmation statement -previously called annual returns along with the declaration of directors and shareholder. The best part is, it can be done online.

Taxes and VAT:

How to track taxes? This is one of the biggest questions for every business owner. It is important to stay updated with the latest tax policies and maintain an accurate and up-to-date record. This will reduce the chances of overpaying or underpaying taxes.

Revenue: Revenue - the most lovable term for business owners. And why not, it’s the purpose of running a business. Keep track of records where your business is performing great and generating revenue.

Cash: Well, this is a part, which doesn’t require any explanation. However, no list of bookkeeping basics is complete without mentioning it. The money in your business account is known as cash. All the transactions are passed through the cash account which is tracked as Cash disbursements and Cash receipts. In the end, this is the lifeline of any business.

National insurance: If you have employees in your company, you will have to pay National insurance. The amount for it will be deducted from the employee’s salary if the salary is above the threshold.  

If your business is small and aims to grow, you need to manage your accounts and finance in the most organized way possible. And for this, it’s important for you to acquire some knowledge about the terms mentioned above. Detailed bookkeeping is a time-consuming task but if done properly, is very fruitful. Hence, keep your accounts correct.

You can also hire third-party services to manage your accounts in case you don’t have your own team.