Bookkeeping is the process of keeping track of all your money coming in and out and flows within your business. Having a chronological record of all the transactions like credit/debit transactions, a record of the assets/liabilities held by your business, and reports of income, expenses, and sales all come under bookkeeping services.
Bookkeeping essentially helps in keeping all financial dealing records in a better way so that anyone requiring to access or audit the accounts will have a clear view of the same. Tax consulting firms usually provide bookkeeping services to companies to help them with their financials. So here are some tips to help your company do it the right way –
Using the Correct Accounting System
Any good business uses one of the two accounting methods commonly used. These are the cash based or accrual-based. The core difference between the two is the timing of transactions. When aggregated over time, the results obtained from both methods are approximately the same.
In cash-based accounting, revenue is recorded when cash is obtained from the customers and expenses are recorded when any of the cash is paid to the suppliers and employees. In the accrual-based method, the revenue is recorded when the company earns something and the expenses are recorded when the company consumes something.
Cash-based accounting is only possible if your company has no more than $5 million in sales per year. It is easy to account for transactions with this method as there are no complex accounting transactions involved. However, the random timing of cash receipts can show a report where the results fluctuate between high and low profits.
Accrual method is used by larger companies as it is required for tax reporting when the sales exceed $5 million. Accrual basis also helps in auditing a company’s financial statement. But unless a statement of cash flow is included in the financial statement, this approach doesn’t reveal the ability of the company to generate cash. Choose your accounting method depending upon the size of your company.
Maintaining daily financial records
One of the most important things to do with regards to your company’s financials is keeping a daily record of all your transactions. This will help you constantly analyze your company’s financial situation. Proper records help further accounting methods as well as audits.
Pay bills on time
This is one of the cardinal rules of maintaining a financial balance in your firm. Pay all your monthly bills on time so that you will not be charged with late charges.
Collecting your Bank statement
Although it might seem trivial, this is also another basic tip with big rewards. Collecting and keeping your Bank statement with other monthly records will help you track all your cost and expenses.
Choose a reliable bookkeeping organization
Availing the services of a bookkeeping service provider will help you keep up with your company’s financial situations and monetary needs on a daily basis. Also, outsourcing bookkeeping services will leave you with more time to do much more for your company’s primary business. Contact your tax consultancy in Dubai for more information on bookkeeping services today.