Things to Watch Out While Doing Business Bookkeeping
By: vish ks
Submitted: 2010-05-04 06:37:28 | Word Count: 539
A small business owner looking to optimize his business operations will do well if he has a list of do's and don'ts on the topic of bookkeeping and sticks to it religiously. It will also help him save valuable time and money in order to move forward fast. We shall take a look at the DON'Ts first and rectify them. Insisting to do bookkeeping on your own does not augur well for small business owners. Many of these small scale business owners and start-up ventures make the grave mistake of maintaining the financial books of accounts all by themselves. They do not have their core expertise in the area of accounting. These entrepreneurs put off this important task and generally end up with a huge backlog in the end. The motive may be to have control over the way finances and bookkeeping are managed in order to avoid chances of misappropriation. But, it has to be remembered that all these come at the expense of having to deviate one’s focus from one’s core revenue generating attempts and activities thereby losing valuable time. Estimates suggest that businesses on an average spend around 30% of their time doing bookkeeping activities. One need not lose out when there are better options such as hiring a dedicated accountant or a bookkeeper, automating the bookkeeping activities, or plainly outsourcing it.
In general, small scale businesses get into this usual rut of not categorizing incomes and expenditures in the most efficient manner thereby ending up maintaining just a single financial accounts book for journal entries. This will lead to a lack of purpose and clarity as to which of the business activities is turning out to be a burden for them. For instance, if your company maintains separate ledger for bills receivables and you are always fighting bad debts, it simply shows your inefficiency in the collection process. Not recording the details of small expenses will attract problems. The average employee believes that it makes no impact on the financials of the company; but these petty expenses will pile up and create big issues over time, when you try to balance your financial accounts. These receipts if not maintained accurately will prove to be problematic at the time of paying your taxes.
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Maintaining just a few Excel sheets can also be a problem later on. A majority of the start-ups and small scale businesses record all their entries in an Excel workbook. They think this will make things easier as it avoids paper work. But, one should remember that as one’s business grows, these Excel sheets may turn out to be an unmanageable monster. There are some DOs as well; things to do right now. One must reconcile with one’s bank account; if one does not follow this practice one will live to find glaring differences when one tallies one’s cash and bank books. This rigorous practice has to be followed every month or at least every three months in order to avoid discrepancies that may prove fatal in the future.
