Let’s suppose you do not like math because you don’t find it worth interesting but when you jump into the ground of business you have to think about being an expert on a number, transaction, financial records, and everything that comes under the umbrella of bookkeeping. Small business bookkeeping in Brampton is essential for business owners to ensure the unstoppable growth of your trade.

What Does Bookkeeping Stand For

Bookkeeping is the process of recording and organizing financial transactions a company made. The bookkeeper is the person who takes up this task; classifies and records every transaction made by the business. When we compare it with accounting it is slightly different in terms of analyzing the data merely collected by bookkeepers. If necessary, accountants may give a piece of advice to upkeep the liabilities and to keep business flourishing. 

A bookkeeper sends invoices, makes payments, and manages the account 

Basics of Small Business Bookkeeping in Brampton

Before you go for hiring a bookkeeper it is important to understand the very basics of booking for a small business and its principles, the application of which contributes to determining the success rate of your business 

  • Understand Business Accounts
  • Set up Your Business Accounts
  • Make an Empowered Decision
  • Keep a Track of Every Financial Matter 
  • Balance the Records
  • Preparation of Financial Records
  • Securely Store Records  

When you open the door of bookkeeping for yourself you do not set up at an individual level. In fact, small bookkeeping tends to manage payrolls as well as sales. 

Common types of Accounts Include; 

Liabilities– these are obligations and dues that businesses own such amounts payable, loans 

Assets- this is cash or amounts nearly all businesses own it may be account receivable or inventory 

Income or Turnover– it is the money earned by the business, typically through sales

Expenses– this is the cash that flows out from the business to pay for some item or service like; salaries and utilities

Equity– usually stock and retained earnings come under this type of account. This is the value of remaining after liabilities are subtracted from assets, representing the owner’s held interest in the business. 

Broadly speaking, the task of bookkeeping starts with setting and collecting all these accounts so that being an auditor you can provide maximum profit to the business. Because you surely don’t want to run a business like next door. So, your bookkeeper can bring in innovation through a smooth and perpetual record of the financial transaction. 

  1. Set up Your Business Accounts

Hiring someone to look after your all types of account details is one thing and setting them up is another. In past days people or businesses use to record the financial statements in a hard copy- physical book called general Ledger (GL). But as the new technology has changed everything over time, likewise it has affected the businesses in the domain of accounting, presentations, and ideas. Therefore, computer software has replaced this physical book. However, this virtual recording tool is still known as General Leger.

To create the modern bookkeeping three cybernetic methods are in common use for small business bookkeeping in Brampton; 

Excel- which is spreadsheet software  

QuickBooks Desktop- which is desktop accounting bookkeeping software 

QuickBooks online- Wave Cloud-based bookkeeping software

Although using spreadsheet software is the most economical option as Google Sheets doesn’t cost a monthly fee, but trying to develop your own general ledger in a spreadsheet program can turn all your hard work into a mega collapse. 

To boom your business and keep the flow of transactions upfront you have to spend a bit from the pocket as Desktop bookkeeping software usually requires a high fee, but the software is then yours to keep. You will require paying a monthly fee with online, cloud-based bookkeeping software to keep your online subscription. However, it costs much lower than that of desktop software.

Otherwise, you have the option to an accountant, bookkeeper, or any reputable outsourced accounting company to manage your accounts and ledger for you.

  • Make an Empowered Decision 

What are you planning to do in case of doing your own books in the home instead of subcontracting to an accounting or bookkeeping company? Here you are required to make one crucial decision before you start setting everything up. Will you go for single-entry bookkeeping or double-entry bookkeeping?

Let us talk about them in detail so that you can make a reliable decision for your business.

You enter each transaction only once while using single-entry bookkeeping. For example, if a customer pays you an amount, you enter that sum in your asset column only. This method is effective for business holders who work in a very very simple domain. Also, in case you work out of your home, don’t have any tool or record to offer, and don’t venture too frequently into the monarchy of cash transactions, you would probably like single-entry accounting.

Larges businesses however, consider the double-entry bookkeeping algorithm which interestingly works on the principle of Newton’s 3rd Law of Motion, but for finances. It states that for every action (in nature), there is an equal and opposite reaction (every action has a reaction). Similarly, in double-entry accounting, any transaction in one account requires an equal and opposite entry in another account. Although, we are not going to deal bookkeeping with physics, but it is very important to understand to manage a business.

Definitely, a double-entry bookkeeping system is more complex and challenging but remember that to stay away from future disaster this method is ideal as it keeps your transaction balanced so don’t let it deter you in any way.  

  • Keep a Track of Every Financial Matter 

Moving forward with your financial transactions when you have generated your set of financial accounts and chosen a bookkeeping system, now it’s time to record what’s actually going on with your cash.

To ensure that each debit and credit transaction is being recorded in the right way this approach is decisive to follow. In the opposite case, when your account balances would not match sadly, you won’t be able to close your books.

4.       Balance the Records

To balance and close the books the last step in basic bookkeeping is balancing your books. Often at the end of the quarter or year, when you tally up account withdrawals and acclaims; the totals should match. This means that your books are balanced.

You have been recording journal entries to accounts as debits and credits. At the end of the period, you will publish these entries to the accounts themselves in the GL and regulate the account balances accordingly. This way you can find an ideal way to keep your business transactions inflow and keep your book close by balancing it using small business bookkeeping Brampton.