Proper bookkeeping bears many benefits to a business. For example, it allows a business to assess and establish its performance regularly. A business can also actively operate in ensuring that they maintain a given level of resources held up either in stock or in the form of cash in hand and bank.
1. Create Separate Receivables and Payables Accounts
Account keeping requires more than just recording the transactions. There is a need to prepare separate accounts to record the money received and that which is paid out. Businesses could consider hiring a certified accountant from Sorenson & Company in Utah to assist them in the creation of the accounts.
The accountant may even advise your bookkeeper to further create separate accounts for individual repeat suppliers and clients.
2. Maintain Separate Personal and Business Accounts
Many business owners, especially those in the sole proprietorship tend to use a single bank account as both their individual and business account. Often, that results in poor money management which can lead to the eventual downfall of a business.
Instead, open a separate account for your business allowing it to achieve some degree of independence. In some cases such as with public companies, it may be illegal for a person to share a bank account with a company.
3. Timely Update of Records
The timely updating of transactions is vital in keeping accurate accounting records. Payments made to suppliers ought to be credited as soon as possible. The same applies to payments received from clients.
That is meant to prevent situations where your teller or accounts clerk forgets about certain transactions conducted earlier in the day.
To ease the situation, many companies have adopted accounting software. The software provides for a real-time update of accounting records. It also makes it easier to retrieve past transactions.
Many businesses are created with the sole purpose of generating profits. As such, it becomes important for a business to keep proper accounting records in a bid to establish their profit levels at all times.