Managing the bookkeeping for your business – it doesn’t sound so bad at first, right? But when you dig deep into everything that goes into managing your business finances, it can be daunting. It turns out that bookkeeping is time consuming and complicated! Some have used the term tedious others go as far as to use the term “drudgery” when describing the duties that go into small business bookkeeping.
Here are six actions that you need to do for accurate and relevant financial statements:
• Prepare source documents for all transactions, operations, and other events of the business.
• Determine and enter in source documents the financial effects of the transactions and other events of the business.
• Make original entries of financial effects into journals and accounts, with appropriate references to source documents.
• Perform end-of-period procedures.
• Compile the adjusted trial balance.
• Close the books.
When you look at these six actions you might think “Hey, that’s not so hard!”
But the truth of it is that bookkeeping is a sensitive task. It can be time consuming, especially if you have not put processes and procedures in place to capture the data.
Your bookkeeping needs to be done by someone who is trustworthy, and the actual work needs to be kept in a safe and secure place. Most important of all? The numbers need to add up, especially when tax time comes around!
So what are your options for managing your business finances? You can do it yourself, hire a new, trustworthy, experienced employee to work on your books, or you can outsource the task to a bookkeeping or accounting firm.
The goal is to produce accurate and relevant financial statements otherwise what I like to call the report cards of your business. Then you can use the data in the financial statements to help you guide your company.