Bookkeeping is an organized process of recording and tracking the financial transactions in a small business. It is one of the first challenges new business owners face when they start getting customers.
It traditionally refers to the day-to-day ongoing recording of all financial records. Therefore, every business needs a bookkeeper, whether outsourced or the business owner themselves. The core duties of a bookkeeper are data entry, reconciling bank accounts, and monthly reporting. It is a time-consuming and tedious job that requires a keen eye for detail.
Additional responsibilities may include
- recording client receipts
- completing bank reconciliations
- monitoring accounts
- preparing payroll
- creating financial reports
When bookkeeping is kept up to date, all the company’s financial transactions will produce accurate data for decision-makers. In addition, the readily available information helps managers of the business in budgeting, planning, and preparing for tax season.
Proper bookkeeping will help with budgeting. For example, when income and expenses are recorded, businesses can use the information to set goals and anticipate operational changes as needed. Budgeting is essential for companies because it helps prepare them for emergencies, attract investors, fund improvements, and be more confident about what lies ahead.