It is a sad fact that the primary cause for failed businesses is the inability to keep a firm hold over cash flow and financial record keeping. In fact, many small business owners do not even know their day to day financial status. In this way it is easy to over extend the business or to allow debts to grow to unacceptable levels. With help from a reliable bookkeeper Northamptonshire businesses can make sure that they keep proper records and remain informed at all times.
Keeping proper records of all the financial dealings of a business is not only prudent and sensible. The law requires that businesses keep such records. These records must be made available whenever certain authorities, such as the income tax department demands it. In some cases businesses are also required to publish their financial status at least once a year. Failure to adhere to the laws can result in severe penalties.
Some people think that bookkeeping is a complicated affair. This is not the truth. In essence, bookkeeping is simply the art of recording all the financial transactions of an organisation. In most cases, these transactions involve either expenditure or income. Most businesses keep record of these transactions in various categories. As far as income goes, for example, they may want separate records for income that came from the sale of goods and income that was derived from selling assets.
Nowadays most businesses adopt a double entry system. This means that every transaction has both a credit and a debit entry in the books. One can look at it as if every positive entry must have a negative entry. When a business sells an asset, for example, the income derived from the sale is positive but the loss of the asset is a negative one.
Of course, those days when transactions were carefully recorded in large ledgers are long gone. So is the image of the dusty guy with pocket protectors and a green visor hidden away in a room at the back. Most organizations now use sophisticated software for their bookkeeping. The term bookkeeping has survived, however. Computers simply make it easier to keep track of transactions, to compile data in different formats and to produce complicated reports quite easily.
There is still a misconception about the difference between accountancy and bookkeeping. Bookkeepers are there to keep the records. They are not employed to interpret those records. Accountants, on the other hand, are qualified to look at the records and to interpret them in various ways. Accountants prepare budgets, create forecasts and evaluate management decisions in terms of financial prudence.
Bookkeeping helps organizations to avoid fraud. In fact, most cases of fraud are only proven once the financial records are studied. Proper records can also help an organization to avoid legal problems and to respond to enquiries quickly. When a business is sold or bought the financial records will play a very big role in the determination of the price.
A proper bookkeeping system that is kept up to date at all times holds many advantages. It helps the owners to make sound financial decisions and to negotiate with banks, creditors and debtors in good faith. Without such a system no business can hope to survive in the long run.
Keeping proper records of all the financial dealings of a business is not only prudent and sensible. The law requires that businesses keep such records. These records must be made available whenever certain authorities, such as the income tax department demands it. In some cases businesses are also required to publish their financial status at least once a year. Failure to adhere to the laws can result in severe penalties.
Some people think that bookkeeping is a complicated affair. This is not the truth. In essence, bookkeeping is simply the art of recording all the financial transactions of an organisation. In most cases, these transactions involve either expenditure or income. Most businesses keep record of these transactions in various categories. As far as income goes, for example, they may want separate records for income that came from the sale of goods and income that was derived from selling assets.
Nowadays most businesses adopt a double entry system. This means that every transaction has both a credit and a debit entry in the books. One can look at it as if every positive entry must have a negative entry. When a business sells an asset, for example, the income derived from the sale is positive but the loss of the asset is a negative one.
Of course, those days when transactions were carefully recorded in large ledgers are long gone. So is the image of the dusty guy with pocket protectors and a green visor hidden away in a room at the back. Most organizations now use sophisticated software for their bookkeeping. The term bookkeeping has survived, however. Computers simply make it easier to keep track of transactions, to compile data in different formats and to produce complicated reports quite easily.
There is still a misconception about the difference between accountancy and bookkeeping. Bookkeepers are there to keep the records. They are not employed to interpret those records. Accountants, on the other hand, are qualified to look at the records and to interpret them in various ways. Accountants prepare budgets, create forecasts and evaluate management decisions in terms of financial prudence.
Bookkeeping helps organizations to avoid fraud. In fact, most cases of fraud are only proven once the financial records are studied. Proper records can also help an organization to avoid legal problems and to respond to enquiries quickly. When a business is sold or bought the financial records will play a very big role in the determination of the price.
A proper bookkeeping system that is kept up to date at all times holds many advantages. It helps the owners to make sound financial decisions and to negotiate with banks, creditors and debtors in good faith. Without such a system no business can hope to survive in the long run.
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