Bookkeeping

So what goes on the accounting and bookkeeping departments? What do these people do on a daily basis?

Well, one thing they do that's terribly important to everyone working there is Payroll. All the salaries and taxes earned and paid by every employee every pay period have to be recorded. The payroll department has to ensure that the appropriate federal, state and local taxes are being deducted. The pay stub attached to your paycheck records these taxes. They usually include income tax, social security taxes pous employment taxes that have to be paid to federal and state government. Other deductions include personal ones, such as for retirement, vacation, sick pay or medical benefits. It's a critical function. Some companies have their own payroll departments; others outsource it to specialists.

The accounting department receives and records any payments or cash received from customers or clients of the business or service. The accounting department has to make sure that the money is sourced accurately and deposited in the appropriate accounts. They also manage where the money goes; how much of it is kept on-hand for areas such as payroll, or how much of it goes out to pay what the company owes its banks, vendors and other obligations. Some should also be invested.

The other side of the receivables business is the payables area, or cash disbursements. A company writes a lot of checks during the course of year to pay for purchases, supplies, salaries, taxes, loans and services. The accounting department prepares all these checks and records to whom they were disbursed, how much and for what. Accounting departments also keep track of purchase orders placed for inventory, such as products that will be sold to customers or clients. They also keep track of assets such as a business's property and equipment. This can include the office building, furniture, computers, even the smallest items such as pencils and pens.

 

 

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Bookkeeping Baiscs

 

Bookkeeping Basics:

Most people probably think of bookkeeping and accounting as the same thing, but bookkeeping is really one function of accounting, while accounting encompasses many functions involved in managing the financial affairs of a business. Accountants prepare reports based, in part, on the work of bookkeepers.

Bookkeepers perform all manner of record-keeping tasks. Some of them include the following:

-They prepare what are referred to as source documents for all the operations of a business - the buying, selling, transferring, paying and collecting. The documents include papers such as purchase orders, invoices, credit card slips, time cards, time sheets and expense reports. Bookkeepers also determine and enter in the source documents what are called the financial effects of the transactions and other business events. Those include paying the employees, making sales, borrowing money or buying products or raw materials for production.

-Bookkeepers also make entries of the financial effects into journals and accounts. These are two different things. A journal is the record of transactions in chronological order. An accounts is a separate record, or page for each asset and each liability. One transaction can affect several accounts.

-Bookkeepers prepare reports at the end of specific period of time, such as daily, weekly, monthly, quarterly or annually. To do this, all the accounts need to be up to date. Inventory records must be updated and the reports checked and double-checked to ensure that they're as error-free as possible.

-The bookkeepers also compile complete listings of all accounts. This is called the adjusted trial balance. While a small business may have a hundred or so accounts, very large businesses can have more than 10,000 accounts.

-The final step is for the bookkeeper to close the books, which means bringing all the bookkeeping for a fiscal year to a close and

summarized. 

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Tips for Preparing Your Books for Year End


The end of the year can be a hectic time if your business’ books aren’t in order. With taxes looming and the progress of your business to consider, it’s important that your financial information is accurate and complete. Your financial statements from the end of the year are more important that any others, and will be referenced for tax preparation and to track the growth of your business. Here are some tips for getting your books in order for the end of the year.

Get Everything in Order

As the year draws to a close, you should think about preparing all of your financial information for that year. Gather up sales and purchase invoices, as well as any record books for sales and purchases. Include anything else you have that is relevant to your finances, such as checkbooks, petty cash records and payroll records.

Keep all of these with a copy of your ledger to give to your accountant at the end of the year (if you have one). If you use bookkeeping software, either use it to generate financial records or include a digital copy of your data. The more information you can give your financial professional, the more detailed a year-end report he or she can generate.

Prepare a Bank Reconciliation

A bank reconciliation matches the balances in your books with information from your bank statements. These should take place at regular intervals, such as every month, to make sure that your record of how much cash the company has is accurate.

When the year comes to a close, gather all of your bank statements from that year for review. A bank reconciliation can also be used to detect cases where fraud has occurred, so that you can then develop better controls to govern your bookkeeping system for next year.

Tax Prep Tips

The year’s end is also the time to take taxes into consideration. Look into purchases you can make to improve your business, while taking advantage of any tax deductions you can get for the current year.  

Double check your inventory to see if you are eligible for any deductions due to a decrease in market value. Talk to your financial bookkeeper to make sure you’re getting the most that you can out of filing.

Start Thinking about Next Year

As soon as this year is over for your business, it's time to focus on the next year. Look for ways that you can compile all of the information that you gathered up for this year as next year progresses. If there are any areas within your accounts that gave you a hard time while you were getting things in order, work out a system that can eliminate the hassle for next year.

Keep these things in mind while you work out your books for the end of the year. They will help to ensure your business sees a smooth transition into the next. Not only that, your financial reports for the current year may help you to secure your company’s growth in the future.

 

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Why It's Important to Keep Separate Accounts for Business Transactions

While it may not seem it like at first, it's extremely important to keep separate accounts for business and personal transactions. In fact, it's recommended that you open a small business account before opening your doors to the public.

A business checking account is simple to open. Many financial institutions have affordable minimum deposit requirements, in the $25 to $50 range. This helps to ensure that there won't be any "money mix-ups" in the future. Keep reading to learn more about why it's best to maintain separate accounts.

Creating a Professional Image

In order to start and continue building a successful business, a professional image is a must. First and foremost, it gives your customers a sense of security. Many people are leery of writing checks out to an individual, as opposed to a business. Separate accounts also minimize the possibility of creditors making a claim against your personal assets.

Building Business Credit

Building business credit may not be something you think about right away. However, it's very important to do so, especially as the business grows. A business credit card gives you more borrowing power.

In the event that your personal credit score is low at the time you're starting your small business, don't give up. There are many ways to raise your score over time. You just need to be patient. Once you qualify for business credit card, you're able to deduct the interest as a business expense.

One way to build your personal credit score is to apply for a secured credit card. With a secured card, you deposit money in a savings account equal to that of the credit card limit. Since most of these cards report to all three credit bureaus, timely payments help to boost your score.

Protecting Personal Assets

If you choose to operate an LLC, separate accounts prevent you from becoming personally responsible for any unpaid debts your business may rack up. When the court system can't distinguish between personal and business finances, chances are that personal assets will be seized to pay off the debt. Taking the time and effort to open a business account might save you from a devastating situation in the future.

Surviving Tax Season

Maintaining separate business and personal accounts help you survive the hectic tax season. Not only that, it also saves you time and money. If all of your finances are jumbled together, it makes it that much more difficult to sort things out for tax purposes.

The Small Business Administration suggests setting money aside for taxes on a regular basis. This is especially true if you intend paying your taxes on a quarterly basis. Keeping money in a business account prevents you from having to tap into your personal account to pay Uncle Sam.

Now that you know the main reasons for keeping your small business transactions separate from your personal spending, your business has an even better chance of succeeding. Unfortunately, there's a lot of competition out there. So, you need to do all you can to stand out among the crowd.

Ishmael St. Louis
Kingdom Survival Bookkeeping

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Why Bookkeeping Is So Important to Small Businesses

Regardless of the size of your business, bookkeeping is something you need to stay on top of. Even if you're self-employed, it's necessary to keep track of the financial side of things. It's the best way to ensure that your business grows and remains profitable.

Continue reading to find out more about why bookkeeping is so important to small businesses. Some of the reasons may surprise you.

1. Paying Bills on Time

A bookkeeping system, even the most simple one, goes a long way in assisting you in paying your bills on time. This includes loan payments, invoices, rent, utilities, etc. Falling behind on bills is generally the number one reason why small businesses fold.

2. Planning Ahead

Every business owner needs to plan ahead, to some extent. Think of it as budgeting. Accounting helps you do this by allowing you to look at your current cash flow and earmark funds for future purchases.

Proper bookkeeping also allows you to think about downsizing, if necessary. Many times, businesses don't show a profit as quickly as anticipated. It's just a fact of life. By keeping an eye on your finances, you'll know if and when you have to cut back.

3. Avoiding a Tax Audit

Unfortunately, one of the quickest ways to get audited is by having messy and/or incomplete tax records. This type of juvenile bookkeeping is one of the biggest triggers when it comes to IRS audits.

It's far better to take the time and energy to keep your books up to date, rather than spending countless (and unnecessary) hours complying with an auditor. In the event you still get audited, having everything in order makes the process go much more smoothly.

4. Getting Deductions

As a small business owner, it behooves you to take advantage of every legitimate tax deduction you can. The money you save on taxes can be put back into the business to help it grow. When you don't keep track of financial details, there's a greater chance that you'll overlook some of the deductions that you qualify for.

5. Setting Goals

One of the best ways to be successful with a small business is to set goals for yourself. Ask yourself questions like, "How am I doing?" and, "Can I really afford to expand?" Adequate bookkeeping helps to answer these questions and allows you to set realistic goals for the future.

If you're not good with numbers, there's no reason to panic. There are several excellent accounting software choices which you can use to manage your own books. Online versions make it even simpler. They include:

* QuickBooks Online - http://www.intuit.com/quickbooks-accounting-software/
* Sage Accounting-https://www. sage.com
* Wave Accounting (free and paid version) - https://www.waveapps.com/
* FreshBooks - http://www.freshbooks.com/


You also have the option of hiring a bookkeeper. The money you spend is worth it when you consider that he or she will help to ensure the highest degree of business success.

These are just a few reasons why accounting is so important for every small business. Competition is tough, regardless of the industry. It's vital to do all you can do to persevere.

https://www. ksbookkeeeping.ca

Phone: 226-272-48489

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Bookkeeper versus Accountant - What They Can Do for You

After successfully launching a small business, many entrepreneurs decide to take on the task of keeping their own records. They often feel that bookkeeping software will be all the help they need to keep their business on the right track. Does this sound like you?

Here's a piece of advice. The extra time spent tracking and understanding your company’s records can easily pull your attention away from the areas of business that need you most. A financial professional, such as a bookkeeper or accountant, makes sure that your business is earning money as efficiently as possible. But, which one is right for you?

Accountant

An accountant analyzes a company’s financial data, including its sales, purchases, payments and receipts. These individuals use the data to prepare financial records, predict business trends, forecast the opportunity for growth and manage unnecessary spending. They handle many of the “big picture” aspects of a company’s finances, rather than day-to-day operations.

For most small businesses, it isn’t necessary to hire a full-time accountant. A business typically doesn’t have enough work to keep a full-time accountant busy until they have around 30 employees. Whether full time or an outside source, an accountant can prepare the systems your business needs to accurately track its finances.

Bookkeeper

A bookkeeper records and organizes the financial data that accountants analyze. This means tracking all profits and expenditures precisely in order to create an accurate, complete record. They follow the rules, or internal controls, laid out by the accountant to minimize errors and as a deterrent to theft or embezzlement.

While bookkeeping software makes it possible for an entrepreneur to track their own records and report them back to their accountant, hiring an outside bookkeeper can free up time and keep your books accurate. All of the data that bookkeepers collect is vital - not only to accountants but also to the day-to-day operation of a business.

The Benefits of Financial Assistance

It’s difficult to make decisions on how best to spend your money if you aren’t exactly sure how your money is being spent. With the help of financial professionals, your business can actually save money that you didn’t even realize was being misused.

With your payments and due dates being tracked by an accountant or bookkeeper, you can save your company from any missed payments or late fees. You’ll also have less to fear, in regard to theft and dishonest conduct, when every transaction your business makes is documented.

Given enough time to analyze the trends and figures of your business, an accountant can even put you on the path to expanding the business and to make sure you have the time and money to help your business grow.

Whether your business is just starting out or is well-established, the assistance of a financial planner will ensure that your business continues to grow financially. A professional bookkeeper can devote time to ensuring your books are accurate so that you don’t have to. Once you’ve had help making sure your books are in order, an accountant can use that data to help you decide the best course of action for your business.

 

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