Small business is essentially privately owned and operated with the involvement of a few people which manages smaller sales. Small business is started on a relatively small capital
and allows independence and freedom of thought and ideas to the beginner. It also provides scope for experimentation.
Bookkeeping is the maintenance of records of all official transactions of a business. The transactions may include invoices, revenue, expenses, cash receivables, profits, dates of transactions and bank statements. Bookkeeping helps keep the accounting book hassle free and prepares it for the tax purpose. It also gives a clear picture of the status of the business.
Manual bookkeeping is affordable however, outsourcing book keeping from professional accounting firms are beneficial. Bookkeeping can be done using a spreadsheet in the former case and through the software in the latter. Accrual-based or cash-based accounting may be used, depending upon the time of recording. Accrual-based system records expenses and incomes after the payments while cash-based system records whenever they occur.
A simple business dealing with invoices and cheques only can use Microsoft Money for bookkeeping. An efficient bookkeeping requires constant update and careful contributions. Some of the methods of bookkeeping include:
- Patented System- Simplex, Everite, Collins.
- Analysis book- Adjusted to requirements.
- Double entry system: involving ledgers.
- Computerized softwares: available in downloadable format.
Bookkeeping helps create a hassle free account sheet and keeps a clean account which further helps evade the tax related problems. It also projects the current status of the business and helps manage the finance in favor of the business to increase profits.
