What is Bookkeeping?
Welcome to this month’s discussion on small business bookkeeping. Over the next several weeks, I will post articles pertaining to bookkeeping theory & practice.
As a successful business owner, I know the daily challenges of running an organization, and what it takes to stay on top of issues affecting your industry. My goal here is to make this process easier for you. How, by passing on the knowledge and the experience I’ve gained over the years. I will provide weekly issues that cover various topics ranging from creating an effective system, managing your books, to gaining valuable information on how to manage your books better. So let’s get started, okay.
WHAT IS BOOKKEEPING
The best place for me is always at the beginning. So our premier topic is “What is bookkeeping?” For most people, we tend to be very challenged when dealing with our own finances, let alone, our company’s finances. But in reality, we all are, on some level, financial strategist, whether we’re good at it or not. So think for a moment, on a daily basis, we are counting our money, determining how much we have, and figuring out where to spend it. There you have it in a nutshell! The whole process of keeping track of our financial picture boils down to basic bookkeeping. So, to give it to you in a more formal definition, bookkeeping is “the process by which you record transactions in order to monitor an entity’s financial position”.
IT’S EASIER THAN IT LOOKS
Believe me when I say, “it’s easier than it looks”. Simply keeping track of how much money you bring in versus how much money you spend, and what you spend it on, is the foundation of bookkeeping. When you are balancing your checkbook, paying your bills, making decisions about borrowing money, considering whether you need additional income; all this activity is involved in bookkeeping. Of course, most companies have a more formalized system, but I think you get the gist of it here. There are so many processes that exist to create an effective bookkeeping system. The goal is to choose a system that benefits your method of operations.
NO MORE DRAMA
Fear comes from the unknown. Imagine being able to make key financial decisions because you are confident in knowing what resources you have available to you. Having a well defined, structured process of bookkeeping will not only give you peace of mind, but it also allows you the freedom to be able to focus on other important business issues. Remember, success comes from being organized and prepared. Let’s minimize those surprises and prepare for success.
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