What is Bookkeeping? – Learning Bookkeeping Basics

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What is bookkeeping?

Bookkeeping generally means tracking of business transactions. A business authority itself can track its transactions in order to know the financial situation. On the other hand, bigger business organizations may hire assistants to do the job for them. Bookkeeping has huge importance in the business process. It helps in making new decisions because a bookkeeper carries equipment, tools and salary information. Better output in the job requires more focused tracking of a company’s business transactions. Bookkeepers also have to know a minimum Project Management idea.

What does Bookkeeping tell Us?

How much is the income: Business enterprises, especially big companies need to create statistics of their financial performance every week or every month. Bookkeeping is sometimes quite similar to accounting, but not totally the same. Business enterprises get the result of their economic situation by keeping the reports. How much money is invested and what is the business result could be known. Getting the financial report, they can take corrective steps following it. Bookkeepers can also find financial mistakes.

How much tax is to be paid: Company has to pay a percentage-based tax on their income. For knowing the correct amount of tax, the job of a bookkeeper is most important. For example, if the government takes 30% of yearly income as tax. The company needs to know its current average income. This indicates the necessity of bookkeeping.

Bookkeeping Gives New Invest Idea

Companies which use to run business activities continuously has a potential market. They have present and future customers to give more and more service. For this reason, companies need to follow a portfolio business strategy and have to invest in a new trade. Bookkeeping gives a financial report to the pioneers which helps them make a decision that investing in which field would be best.

Tracking of Transactions – Money In, Money Out

Bookkeeping gives you a direct vision that where is your money going out and how much money is coming in. When you execute bookkeeping. You can keep an eye on your expenses and make a better budget. You can also be able to understand the cash flow. Knowing about the income and expense is so important to know where your business is going.

Some common questions are there in a business that comes often. How much money is your income? How much tax should you pay? Is any new invest possible right now? What are your mistakes? – These common appearing questions get automatically answered when you have a bookkeeping report.

Duties of a Bookkeeper

In the company’s office, or from a remote location, assistants can provide the service of bookkeeping. One of the duties of a bookkeeper is receiving the scanned receipts. Any company that the assistant is working for, must have a receipt system in buying and selling. The assistant who is responsible for bookkeeping receives the scanned receipt or voucher to enter into his database. Bookkeepers use two entry systems such as i) Single Entry System and ii) Double Entry System to calculate the data. The task of digital bookkeepers is called computerized bookkeeping.
The bookkeeper also looks into the bank transactions. Transactions that happen between the company and bank is definitely a part of the company’s financial system. That’s why looking into bank transactions is a vital duty of bookkeeper.

Bookkeeping Provides Final Report

Several kinds of financial issue that are tracked over time, bookkeepers gives a weekly or monthly report. For example, a ‘profit and loss report’ is made by analyzing product sales or service charges, balance sheets are provided after weekly or monthly bookkeeping. These reports are most essential for the management people or the decision-makers to know the cashflow. Profit and Loss Report, Monthly Balance Sheets and Cashflow help a company making a proper decision.

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