How do I set up basic bookkeeping for small business?

A lot of small businesses are still not maintaining a proper bookkeeping system in their organization. It is very important for them to understand that bookkeeping is one of the vital aspects of any business. They record all the financial transactions happening in your business organization. So, it does not matter if your business is small, maintaining a basic bookkeeping system is important. It will give you a proper understanding of your cash flow and manage your finances better.

The basic bookkeeping for small business can be easily set up ensuring all important aspects are done. If you do not have much idea about bookkeeping then this guide will help you understand basic bookkeeping.

What are the important aspects of basic bookkeeping?

Whether you are hiring somebody or doing bookkeeping yourself, there are some fundamental aspects of aspects of setting up bookkeeping.

Here are the fundamental aspects to set up basic bookkeeping for small business:

• Recording financial transactions

Recording all financial transactions at the proper places in the accounting books is one of the basic bookkeeping aspects. The journal entries are done by the bookkeepers to record credits and debits. It is done on the general ledger and making the financial transactions entry in it is also referred to as making journal entry.

• Choose a suitable method of bookkeeping

Single-Entry bookkeeping and Double-Entry bookkeeping are two main methods of bookkeeping. Most large businesses use standard double-entry bookkeeping that helps in maintaining accuracy and efficient management. Small businesses can also opt for the single entry bookkeeping system if their transactions are lesser.

• Preparing basic financial statements

The basic activities will also include preparation of the important financial statements. Balance sheet, income and expense statements, and cash flow statements are some of the basic financial statements that you must make.

• Handling taxes

Taxes are important for every business, so know where all the taxes are applicable to you. Further, you can make provisions for the taxes for each of the transactions. If you find tax-related aspects complicated then you can take the guidance of tax consultants. You can make necessary setting in the accounting software that can automatically handle most tax-related aspects.

• Payroll management

Payroll is one of the basic bookkeeping for small business if you have employees. Here, you need to maintain the work details like number of hours dedicated along with the rates. While calculating the total pay, withholding and the taxes applicable must also be calculated properly.

• Documenting petty cash

Petty cash is one of the common aspects for most small businesses. While maintaining the bookkeeping, all the necessary documents for the petty cash must be maintained. Make sure that petty cash is maintained properly, as it can be a better asset for your balance sheet.

• Use suitable software

Traditionally bookkeeping was done on the physical ledger books. However, now most businesses uses accounting software for maintaining bookkeeping. It can automate most of the tasks and bring accuracy, so choose proper software for bookkeeping.

These are some steps to set up basic bookkeeping for small business. If you still find it difficult to handle the bookkeeping of your business then outsource this task to the experts.

Meru Accounting provides outsourced bookkeeping for small business cost-effectively. Their experts will handle all activities of  the basic bookkeeping for small business. They are well-equipped with the technology to handle bookkeeping. Meru Accounting is a proficient bookkeeping handling agency across the globe.