One of the most important parts of any business – regardless of how large or small – is its finances. Keeping up with all income and expenditures not only provides a company with a quantifiable measure of their success, but it also keeps businesses from making mistakes in their taxes, which can cost you dearly. Business bookkeeping is no easy task, but it’s critical to the existence of your company. Here are 5 of the most important bookkeeping processes:
Prepare Source Documents – A source document is the beginning of the entire business bookkeeping process. This is the item (invoice or bill) for which the official ledger book entry is based. These detailed documents must be precise in order to effectively keep the books.
Determine Financial Effects – Every single transaction, including all invoices, bills and expenses, affect the business. Even if the effect is small, it still must be recorded. The business bookkeeping specialist must decide what is relevant about a transaction as well as how and where it should be recorded.
Make Journal Entries – No, this doesn’t mean writing a synopsis of your day. In business bookkeeping, a journal is where each transaction is recorded. The transaction information also stays in the original source document and is noted on each of the accounts that it affects.
Handle End-of-Period Procedures – In business bookkeeping, you must add up and
prepare each of the records for accounting reports, financial statements and tax returns.
Close the Books – At the end of each year, the bookkeeper must handle all duties associated with ending the fiscal year and begin preparing for the next fiscal year. This means preparing the books so you, or the necessary personnel, can create end of year reports and future projections.
These five processes sound like quite a bit of work and, for the business owner doing everything on their own, it is a heavy load. However, there are many professionals here at Salt Lake City Bookkeeping who would gladly assist you with these duties and take the burden off your shoulders.
What sorts of special processes do you have for bookkeeping at your company?