Bookkeeping for Business Start-ups

The term bookkeeping is often mistaken with accounting. People confuse the two terms for each other, as they are related and go hand in hand. Accounting has an extensive scope, which includes analyzing and interpreting transactions and events with regards to the people and history involved. 

Bookkeeping is part of accounting. It is the first phase of accounting wherein all financial transactions are systematically recorded, either in journals, petty cash books, ledgers or daybooks. This is done by a bookkeeper. After which, the accountant transfers all the records from the bookkeeper to the balance sheet and income statement. 

Nowadays, businesses have the opportunity to use advanced programs to make book keeping more manageable. Various software help make financial records, analyses and interpretations more accurate.

Here are some of the benefits of proper bookkeeping:

• It helps in forecasting for the needs of the business, thus aiding with the formation of a budgeting plan.
• It can aid in the evaluation of the business’ future; whether it will grow, remain stagnant or goes down.
• It sets projections and goals for the business.
• It can lead to excellent cash flow management.
• It improves the use of money for the whole business operation and, therefore, gives way to a good accounting system.
• It keeps the business from financial crises.

Terry Powell sees the importance of bookkeeping for starting businesses. Budgeting can be done easily with the help of bookkeeping. Financial records can also be kept from errors, which can jeopardize the stability of the business. Proper bookkeeping can also help with minimizing salary expenses.

That is why Terry Powell advises businesses to study bookkeeping or hire a good bookkeeper firsthand. There are many online tutorials that can help in the learning phase. A business owner can also practice bookkeeping using forecasted data. These can be found in the business’ feasibility study or business plan. 

If you’re planning to establish a new business venture, Terry Powell recommends doing bookkeeping to get off to a good start. As you move along, you will discover how this practice can help your business prosper and grow. Good luck!