Steps of Bookkeeping for Small Business
Bookkeeping is an initial step of account which enables to maintain, reconcile the record of income, expenditure, liabilities, AP and AR in organized manner for evaluating revenues.
Ledger Creation
Types
• Traditional method of maintaining hard copy of the ledger. • Modern accounting software and personal finance software.
Why?
• To maintain current balance account including cash in hand, cash in bank, expenditure, revenue and other ancillary accounts.
Recording Payments
Types
Why?
• • • • •
Tax Utility Bills Salary payments Invoices paid Memorandum
• To maintain records of payments including date, payee, category, memorandum and record of the cheques.
Recording Receipts
Types
• • • •
Received invoices Sale of the product Debtor cleared debt Sale of an asset
• To maintain the record of incoming money.
Why?
Scheduling Upcoming Payment or Account Payable (AP)
Types
• Recurring payments • Rent • Utility bills
Why?
• For getting prepared to meet future expenses by extracting the idea of prospective income and expenditure.
Scheduling Account Receivables
Types
Why?
• Debtors’ payment • Outstanding rent • Income through sale • To eliminate the risk of getting the cheque bounced which will be received from your client.
Reconciliation
Types
Why?
• Traditional paper-bound way of cross-examining transactions • Modern soft-copy way of automate reconciliation. • To avert the possibility of errors, double entries and incorrect entries in ledger.
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