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GENERAL BOOKKEEPING INFO
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GENERAL BOOKKEEPING INFO
There are two main reasons for bookkeeping and accounting:
- Owners, managers. Shareholders and others need to know the financial state of their company(ies) for proper management decisions;
- Accurate reporting to government agencies.
A Management Tool
Many people have trouble managing money. People mismanage money either accidentally or deliberately and the results of this mismanagement are often tragic and result in bankruptcy. Accurate accounting is essential to successful money management. Managers, owners, etc. must know where they are generating income and where they are spending it to maintain a successful business.
All businesses, large or small - from the paperboy to the Federal Government - must have a complete and accurate system of record keeping. All of these people must show the operations of their businesses in financial terms for various reasons: when applying for credit, figuring costs, keeping within their budgets, or paying their employees.
Accounting records reveal the financial strengths and weaknesses of individuals or businesses.
A Business Owner Needs To Know Where The Business Is Making Money And Where It Is Spending It If The Business Is To Succeed.
The primary factors to determine are (1) the areas of the business that are making money and (2) The areas that are not.
Once the two factors have been determined, expenses can be decreased, profitable areas can be strengthened and the business can make an even greater profit.
A good bookkeeper will not only enter deposits and disbursements but will isolate the following areas for management:
- Which product or service income is coming from;
- How much money is due the company and from whom;
- How much the business owes and to whom;
- Where the business is actually spending money;
- How much profit or loss the company has sustained.
Accurate financial reports offers the owner or manager the number one tool to successfully expand the company and meet financial targets.
Correct financial reports which itemize income sources and detail expenses (otherwise known as a "Profit and Loss Statement"), and a snapshot or brief overview of what has occurred over the life of the business (a Balance Sheet) provides the necessary information to determine the financial condition of the company for any period of time. Based on these reports, managers are better able to make decisions for increased profits.
Accurate bookkeeping is necessary for the reporting of income, payroll, sales, city, local and business taxes. A good bookkeeper will accurately book the transactions so the accountant can then file the various quarterly and annual tax returns with the State and Federal agencies. Should the returns ever be questioned the bookkeeper should have all the records and receipts on file for support.
Computerizing business and personal finances can save hours of work.
There are many good bookkeeping software programs available on the market for all types of businesses. We recommend you look over the various programs and choose one that best suits your needs. Some will track receivables but not loans, others loans but not receivables. Try to buy a popular program so it will be easier to find a professional bookkeeper or accountant who is already familiar with the program and can make necessary entries and/or adjustments.
Total Tax Solutions can train you or one of your employees on Quicken, Quickbooks and Quickbooks Pro. We can also set up your accounting books so data entry is easier and more accurate.
Bookkeeping Basics | Methods of Accounting | Financial Reports
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Total Tax Solutions, Inc.
Email: info@totaltaxsolutions.com
Voice: (818) 352-0384 Fax: (818)
352-8684
Post Office Box 10865 Glendale, CA 91209-3865
