Small businesses with limited resources can be hard to run if everything is managed on your own. Cash flow management is crucial to business success, and it is a challenge for most businesses. Whether you are trying to invoice effectively so that you have enough cash to pay your bills or build up cash for investment, liquidity is a problem.
Thus, keeping track of cash coming in and going out of your business is easiest and most efficient when you use a small business bookkeeping service. Which may include finding best ways to track transactions and books on a daily, weekly, monthly, and quarterly cycle.
What are Bookkeeping services?
In comparison to accounting, bookkeeping services for small business involves keeping track of financial transactions and preparing financial statements, which is different from accounting. The role of bookkeeper is to ensure employees file invoices and expenses correctly and to manage payroll on a day-to-day basis.
*Note it down so next time you know how a bookkeeper can help you manage your accounting needs.
Why bookkeeping is Important to your business?
All businesses require Accounting & bookkeeping services to ensure accurate financial / operational information. Investors, regulators, and management all need this information.
For a small business overlooking such important accounting needs is not really an option in a Macro market saturation serving area. It might also lead to many inefficiencies and inaccuracies in Managing financial statements and documents.
Knowing you accounting better, with few important bookkeeping basics covered will not harm your business but provide a stable and strong financial stability for sure. And help you better coordinating with a tax accountant.
Just sufficient information about what is bookkeeping services. Essential Accounting Skills for start-ups, why is it important to understand bookkeeping for small business? and most important how to find Bookkeeping Services Melbourne? for businesses running near Victoria.
In this blog we are sharing top bookkeeping basics to help small business find their way to gain significant success managing and hiring bookkeeping services. So, let us get started.
Bookkeeping essentials you should know before starting a business
1. What is journal entry
In journal entry business transactions recorded in an original order using the double-entry bookkeeping system. The journal entries include two accounts- debit and credit. Accountants utilise a customised journal to record regular transactions like purchases, sales, and cash receipts to make this procedure easier. The general journal is used to record transactions that cannot be reported in the specific journals. Every financial transaction that a company firm makes requires an accounting journal entry. Depending on the intricacy of the business, different sorts of journal entries might be required.
2. What is single entry and double entry in bookkeeping system?
Single entry in bookkeeping solutions, refers to accounting processes where the transactions done in one side of business and recorded cash book only affects one account. Usually, it is just a cash register and a list of personal accounts with debtors and creditors. In double-entry bookkeeping, however, the debits and credits are distinct. Every transaction deducts money from one account and credits money from another.
Using the double-entry accounting technique, business transactions are documented in a journal (also known as Books of Original Entry) in chronological sequence.
Here, we can have five types of accounts:
- Shareholders’ equity
3. What are debits and credits?
A debit in accounting refers to an entry on the left side of an account ledger, while a credit refers to an entry on the right side. For a transaction to be balanced, its total debits and credits must match. Credits do not always equal decreases, and debits do not always equal rises. An organization uses debits and credits in its bookkeeping to ensure that its books are balanced. Debits can increase assets or expense accounts and decrease liability, revenue, or equity accounts. Credits do the reverse. Whenever a debit entry appears, a credit entry must appear for the same dollar amount, or vice versa.
4. What is accrual accounting?
Accrual accounting is concept of tracking and recording transaction at the payments receiving end. Most concerned about expected future cash receipts and incoming payments and expense whey they occur. An accrual method of accounting records revenue and expenses when a transaction occurs rather than when a payment is received. According to this method, revenues and expenses should be recognized at the same time.
5. Impact of accounts payable
Accounts payable can have a significant beneficial impact on your company’s profitability if you follow a set of best practises in account payable management. The corporation must, first, pay its payments on time. If this is not present, nothing else will work. Second, regardless of how many suppliers you have, if you pay your bills on time, you can build trust with them. If you have faith in your suppliers, they will want to assist you in a variety of ways, including offering you discounts that will have a major influence on your profitability.
6. Credit for small business
As more businesses using the double Entry method for their bookkeeping that keep financial information that relies on a two-sided accounting entry to keep financial information. Getting a loan from a valid source requires paperwork. People who lend you money would certainly want to know the financial state of your business. They will need to know about your cash flow, revenue, expenditures, obligations, and assets to carry out so. By analysing the data from your income statement, cash flow statement, and balance sheet.
Good bookkeeping services can provide you exactly what is required for a financial aid. This may also include financial statements, which are essential for most forms of credit, loans, and seed investments.
7. Petty cash account
Business owners save money by using a petty cash fund for small expenses. Petty cash can be useful for one-person sole proprietorships, such as financial advisors, to small businesses with multiple divisions. Small expenses of a business and employee reimbursements for expenses are often covered by the money in petty cash. A petty cash fund enables a small business to quickly refund or pay small expenses without using a company check or credit card.
In time, your company will grow, and monetary management challenges will arise. Managing these challenges on your own can be tricky. Here Mizael Partners can supply the best small business Bookkeeping services Melbourne for your business. Our Bookkeepers in Melbourne can help you in keeping complete and accurate records of your business’s financial transactions, including your present and projected financial condition.
Looking for best accounting services in Melbourne? We can help
Mizael Partners specialises in ensuring that all financial records accurately reflect an individual’s or organization’s financial position. We are amongst the top accounting services provider in Ringwood, Melbourne.
Where needed, we ensure that all financial statements and records comply with Australian Accounting Standards or International Accounting Standards, as well as the Australian Charities and Not-for-profits Commission (ACNC) and the Australian Securities and Investments Commission (ASIC). We also hold frequent training sessions for our employees to ensure that they are up to speed on all tax, accounting, and other laws changes.
To contact our tax accountant Melbourne.
Please call +61 (0) 466 228 000 to speak with one of our licensed accountants.