Guide on Bookkeeping and Money Management
Alternatively, it refers to the technique of recording an organization’s financial accounts. Bookkeeping mainly records transactions involving purchases, sales, receipts, and payments by a person or an organization or corporation. Single-entry bookkeeping system and the double-entry bookkeeping system are the most commonly used types of bookkeeping. The process of recording financial transactions of a business is mostly done by a professional known as a bookkeeper who records the day to day monetary transactions of business.
The following are the reasons why bookkeeping and financial management is essential to the growth of a business. Bookkeeping helps businesses to be in a position to manage and analyze its finances. Besides, it provides systematic up to date follow-ups and on time payments of goods and services provided by the suppliers. Also, the process enables a business to keep track of the receipts and other transaction documents for purposes of computing taxes. In addition tax return computation becomes easier more so when organized in a balance sheet, profit, and loss account as well as cash flow. Suppose a business wants to provide crucial information to its investors, then it becomes easy since the information on the financial transactions is well recorded through bookkeeping. Bookkeeping makes it easy for the business to plan its strategies as well as it provides proper record keeping of the transactions as required by law.
For an individual, money management provides security of being in the know of the resources that one have to counter unforeseen expenses including being fired from work, car breaking down and other unexpected expenses. People who have properly managed their finances are in a better position to overcome stress and conflict. As your incomes grow, your financial planning will not just involve budgeting so that all the expenses are covered each month, but also determining how to invest the surplus that accumulates above what you spend. On the other hand, effective money management is a vital constituent for attaining your long-term objectives such as buying a house and starting a family, also, keeping a budget enables you to save for all the things you hope to do someday. Likewise, properly managing your money enables you to pay them off and ease your dependency on them, in addition, those school loans will seem less of a burden once you factor them into a budget that you can comfortably adhere to.
If you want to check your finances, it is advisable to follow the following bookkeeping tips. It is vital to learn how to use the accounting soft wares such as QuickBooks since it contains relative information on how to create financial report, reconcile bank and other financial computation. If you are not in a better position to do the computation, you can employ a home-grown bookkeeper to offer the services you need, and then take the books over to a certified public accountant for planning and tax preparation at the end of the year. Separating business and personal bank accounts will make bookkeeping much easier and help maintain your corporate veil if you have a formal entity.