If you are new to the online business, bookkeeping is one of the things you should familiarise yourself with. Whether you have a small or big business, keeping your financial records organised can make your life less stressful. It plays an essential part in measuring your business’s performance.
What Is Bookkeeping?
Bookkeeping refers to the systematic recording of a company’s financial documents. It is documenting incoming and outgoing financial transactions, including the sales, procurement, and payment, and updating them regularly.
Responsibilities of a Bookkeeper
The bookkeeper is in charge of the following tasks:
Documenting all receipts, payments, and other financial transactions
Creating and filing the source documents for all the transactions recorded
Adding the entries to ledger accounts
Preparing trial balances, cash flow statements, and financial reports
Creating the bank reconciliation statement
Depositing the money received by the company
Issuing invoices to pay for the company’s expenses
Paying accounts on behalf of the company
Performing the duties of payroll administration
Filing tax returns
Help with the company’s budget planning
Preparing financial statements for stakeholders
Bookkeeping 101: What You Should Know
Let us first define all the accounting terminology to help you understand the concept better.
Asset - These are all items of value that the company owns. It can be a physical asset like inventory, office equipment, computers, accounts receivable, vehicle, or real estate, or it can be an intangible asset like intellectual property.
Liabilities - These are the debts to be paid by the company to other suppliers, lenders, etc. It includes loans, mortgages, accounts payable, and others.
Income or Revenues - This is the incoming money that the company earns through selling their product or services.
Expenses - These are the outgoing money that your company use to pay for assets or services, such as the salary of employees or pay for utilities.
Equity - It refers to the worth of your business or how much you have left once you paid for all your liabilities
Balancing the Books
At every end of an accounting period, you need to balance the books of your company. This step is done to determine how much profit or how much loss the business made during that period.
The terminologies defined above are what you will encounter when you are balancing your books. In doing so, you have to keep track of your company’s assets, liabilities, and equity and compute using this accounting equation:
Liabilities + Equity = Assets
What You Need to Know and Have
Know your numbers and basics
A bookkeeper always deals with numbers. You have to know the basic of Math and accounting. You have to keep track of all the financial concerns of your company, and it will require careful analysis and some legal knowledge too.
Be a great communicator and an organised person
It is important to keep track of your financial flow every day to make sure your record is accurate. When doing this, you need to keep track of all the employees’ spending. Create a system to make this task easier for you. Having an approved flow for requesting money and filing reimbursements can help you monitor the money flow better.
Be resourceful
If you are handling a small business, and you think you are not capable of hiring an e-commerce accountant yet, you can use accounting software to help make your everyday financial tracking easier. Using software can help streamline or automate your process. It makes data recording and creating reports faster and manageable.
Conclusion
Bookkeeping plays a vital role in any business. It would be difficult for any business owners to see their progress or current status without the basic knowledge of bookkeeping. Although you can use accounting software to help you manage all your finances, having an accountant for online business check your statements at least every end of the accounting period can ensure that you are on the right track.
If you are a business owner in Australia and need an accountant for e-commerce, you have come to the right page. We provide e-commerce accountant as well as e-commerce accounting software to help guide you with your numbers. Contact us today for more information.