Basics in Bookkeeping

Though is seems like a laborious process, bookkeeping has some major benefits for any business.

Generally speaking, bookkeeping has two basic goals:

  • To keep track of your income and expenses; This enables you to make significant decisions to make profits
  • To collect the necessary financial information about your business to file your various tax returns.

Following are the 03 main steps of a typical bookkeeping process.

Step 1: Keeping Your Receipts

Comprehensive summaries of your business’s income and expenses are the most important when it comes to accounting and bookkeeping process. But they can’t legally be created in isolation. Each of your business’s sales and purchases must be backed by some type of record containing the amount, the date, and other relevant information about that sale.

Step 2: Setting up and posting ledgers

A completed ledger is a summary of revenues, expenditures, and whatever else you’re keeping track of. Later, you’ll use these summaries to answer specific financial questions about your business such as whether you’re making a profit, and if so, how much.

Step 3: Creating Basic Financial Reports

Financial reports are of paramount importance because they bring together several key pieces of financial information about your business. The income ledger may tell you that your business made a lot of money during the year, you may have no way of knowing whether you turned a profit without calculating your income against your total expenses. And even comparing your monthly totals of income and expenses won’t tell you whether your credit customers are paying fast enough to keep adequate cash flowing through your business to pay your bills on time. This is the main reason that you need financial reports.

For professional bookkeeping and accounting services in South West London, contact KVS Accountants. KVS serve as bookkeepers in Putney, Fulham, Wandsworth, Barnes, Barnes Common, Battersea, Wimbledon and Hammersmith

 

Tags: , , , , , , ,