Of course, no one gets into business to be an accountant. But, to be a successful businessman you need to understand how your business is doing financially! You need to start record keeping all your business financial transactions- sales, expenses, cash-in-hand daily.
These are the bookkeeping basics you shouldn’t ignore:
✔ Track what you have purchased and sold.
List every item purchased and sold. Track all incoming money from what you sell. Track the cost of all raw materials or finished goods that you buy for your business.
✔ Track expenses made for your business.
You need to know how much money you’ve spent. Otherwise, how will you know how much profit you’re making exactly?
✔ Track who has to pay how much.
If you sell products or services and don’t collect payment immediately you have “receivables” and you must track them. This is money due from customers, and tracking them is important to be able to send timely payment reminders and accurate bills or invoices.
✔ Track your stocks in Inventory.
Items you have in stock are like money sitting on a shelf and must be carefully accounted for and tracked. Sell them wisely, according to expiry dates to avoid losses.
✔ Track money to be paid.
No one likes to send money out of the business. Good bookkeeping helps assure timely payments and – importantly – that you don’t pay anyone twice by mistake. Paying bills early can also build trust in them.
✔ Track loans taken.
If you’ve borrowed money to buy equipment, vehicles, furniture or other items for your business, this is the account that tracks what’s owed and what’s due.
Some of you may maintain these details in a bundle of papers, some use spreadsheets for bookkeeping, some completely depend on their accountants, while some smart ones prefer to do it digitally on an accounting app like Vyapar! A great deal of work can be done automatically such as preparing tax reports, calculating profits/losses when you choose software.
Whatever your method is, you need to have control over your business accounting and have some understanding of it. And most importantly bookkeep yourself!
By doing bookkeeping on your own, you can
– Always be informed about your business, know how well your business is doing.
– Know where your business is going & can plan for its future.
– Access whatever information you need about your business instantly.
– Save money & time, the two most important things for a businessman.
– It also helps avoid serious and expensive tax problems.
– Run your business more effectively with proper bookkeeping and accounting!