While working for small and medium size businesses, I noticed
that they didn't have an effective bookkeeping system.
As a result, their records were inaccurate, they were not able to keep up with paying their expenses, and also were not able to pay their taxes accurately as a result. Creating and maintaining an effective bookkeeping system is important because it will enable the business owner, the bookkeeper, and other parties to accurately learn of the business's well-being and enable them to make informed decisions regarding their business development and achieving their business objectives. To create a good bookkeeping system, the business must have the right bookkeeping software that will suit its needs, keep all its records organized and in place, have basic accounting knowledge to be able to analyze the outcomes of the bookkeeping system, create regular backups of the bookkeeping computer files, and regularly enter the bookkeeping data as the business progresses. You might be told that creating a bookkeeping system is hard and that you need professional bookkeeping help, not necessarily. This however provides basic steps to self maintain a bookkeeping system.
Purchasing bookkeeping software requires some research because there is several software out there that does the same thing. For example, there is Sage Peachtree, Intuit Quick Books, Sage Simply Accounting, Microsoft Money, and more. You can even use Microsoft Excel to create a bookkeeping system (you will however need to have good knowledge of accounting & Excel to do that). You will also need to learn to use the program which can either be done through a bookkeeper, reading the program manual, online, or simply learn on your own through trial and error. A budget of $100 - $700 can be sufficient for software depending on the complexity of the version you purchase.
Setting up the program is not a hard step; you only have to follow the steps provided when you insert the CD into the CD drive of your computer. The program will set itself up automatically into your desktop and you just have to find its icon. Once you do it will promote you to create a new file for your company (or simply click on file and then new) and follow the steps.
It's important to keep all your business receipts, cheques, and statements in tact because you will need to enter those into the software to get an accurate picture of the business. Create a filing system that perhaps separate paper by where it's from (vendor, customer, etc...). Not having your records in tact can be difficult because you will end up assuming numbers to enter in the bookkeeping software violating the first Accounting Principal, maintaining evident for each purchase or revenue entering the business. Assuming numbers will also end in inaccurate results for your business. However this would not occur to someone with some accounting knowledge.
While having accounting knowledge is not crucial, but it's very beneficial for the business owner specially if there is no bookkeeper in the business. You do not have to be a star in accounting, but knowing the difference between assets, liabilities, revenues, equity, and expenses would be a good step in reading your financial statements. Many websites now offer free introductory accounting course to learn about different financial statements, and the meaning of those numbers that come up from different receipts and business interactions. Being able to analyze the outcome of the financial statements would give the owner a good idea about what each number means and what has to be done to improve revenue and decrease expenses. http://www.free-ed.net is a good website for those who want to get free course in accounting and different business aspects.
Having backups for your bookkeeping computer file is important in case of hardware failure or inability to access the computer. If the system of your business goes down, you won't have to worry about your records and re-creating them over again. Simply save another copy of the file(s) in a floppy disk, CD, USB stick, or online. Make sure you have 2-4 different copies at least stored in different Medias and kept safely to avoid any scratches or damages to them.
After you create your bookkeeping file and everything is ok, make sure you regularly enter any transactions occurred to the business in the software. If you forget, it will pile up and before you know it you're electronically a year behind in your bookkeeping system and trust me it's not fun catching up. Enter all the transactions that occur that involved money. Print monthly statements to review the well-being of your business and see what you will need to do to increase your revenues and continue operating effectively.
http://ezinearticles.com/?How-to-Create-an-Effective-Bookkeeping-System&id=6845699As a result, their records were inaccurate, they were not able to keep up with paying their expenses, and also were not able to pay their taxes accurately as a result. Creating and maintaining an effective bookkeeping system is important because it will enable the business owner, the bookkeeper, and other parties to accurately learn of the business's well-being and enable them to make informed decisions regarding their business development and achieving their business objectives. To create a good bookkeeping system, the business must have the right bookkeeping software that will suit its needs, keep all its records organized and in place, have basic accounting knowledge to be able to analyze the outcomes of the bookkeeping system, create regular backups of the bookkeeping computer files, and regularly enter the bookkeeping data as the business progresses. You might be told that creating a bookkeeping system is hard and that you need professional bookkeeping help, not necessarily. This however provides basic steps to self maintain a bookkeeping system.
Purchasing bookkeeping software requires some research because there is several software out there that does the same thing. For example, there is Sage Peachtree, Intuit Quick Books, Sage Simply Accounting, Microsoft Money, and more. You can even use Microsoft Excel to create a bookkeeping system (you will however need to have good knowledge of accounting & Excel to do that). You will also need to learn to use the program which can either be done through a bookkeeper, reading the program manual, online, or simply learn on your own through trial and error. A budget of $100 - $700 can be sufficient for software depending on the complexity of the version you purchase.
Setting up the program is not a hard step; you only have to follow the steps provided when you insert the CD into the CD drive of your computer. The program will set itself up automatically into your desktop and you just have to find its icon. Once you do it will promote you to create a new file for your company (or simply click on file and then new) and follow the steps.
It's important to keep all your business receipts, cheques, and statements in tact because you will need to enter those into the software to get an accurate picture of the business. Create a filing system that perhaps separate paper by where it's from (vendor, customer, etc...). Not having your records in tact can be difficult because you will end up assuming numbers to enter in the bookkeeping software violating the first Accounting Principal, maintaining evident for each purchase or revenue entering the business. Assuming numbers will also end in inaccurate results for your business. However this would not occur to someone with some accounting knowledge.
While having accounting knowledge is not crucial, but it's very beneficial for the business owner specially if there is no bookkeeper in the business. You do not have to be a star in accounting, but knowing the difference between assets, liabilities, revenues, equity, and expenses would be a good step in reading your financial statements. Many websites now offer free introductory accounting course to learn about different financial statements, and the meaning of those numbers that come up from different receipts and business interactions. Being able to analyze the outcome of the financial statements would give the owner a good idea about what each number means and what has to be done to improve revenue and decrease expenses. http://www.free-ed.net is a good website for those who want to get free course in accounting and different business aspects.
Having backups for your bookkeeping computer file is important in case of hardware failure or inability to access the computer. If the system of your business goes down, you won't have to worry about your records and re-creating them over again. Simply save another copy of the file(s) in a floppy disk, CD, USB stick, or online. Make sure you have 2-4 different copies at least stored in different Medias and kept safely to avoid any scratches or damages to them.
After you create your bookkeeping file and everything is ok, make sure you regularly enter any transactions occurred to the business in the software. If you forget, it will pile up and before you know it you're electronically a year behind in your bookkeeping system and trust me it's not fun catching up. Enter all the transactions that occur that involved money. Print monthly statements to review the well-being of your business and see what you will need to do to increase your revenues and continue operating effectively.
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