Business bookkeeping and why you need to keep on top of it

Bookkeeping / Finance

Business bookkeeping and why you need to keep on top of it

Bookkeeping is defined in the dictionary as “the activity or occupation of keeping records of the financial affairs of a business”.

Bookkeeping is an integral part of any business and should be one of the main admin / finance items which you keep on top of, always. Another important point to note is that bookkeeping is equally important whether you are trading as a sole proprietor or as a registered company, both structures require that you keep an accurate set of financial records regardless of how big your business is. These records can be kept on a basic Excel spreadsheet or in an accounting system such as Xero.

Here is a basic explanation on the what and why’s of bookkeeping.

Bookkeeping is the process followed to record all financial transactions of the business in order to firstly keep track of these and secondly to keep your business compliant from a statutory perspective.
  • Accurate decision making

Accurate records are what you will need in order to make calculated business decisions, these records will be the cornerstone of all decisions relating to the finances of your business.  Let’s be honest, all decisions ultimately have a financial impact in one way or another!

  • Timeous action

Timeous financial results (as a result of timeous bookkeeping practices) are needed to make calculated and intentional changes in your business whilst you still have time to make these impactful.

  • Statutory compliance

Now more than ever you need to make sure that you are compliant with all SARS and other statutory requirements.  All businesses are required to maintain financial records which are both accurate and complete and a sound bookkeeping process is how you do this.

In simplified terms bookkeeping is recording all business-related transactions in order to keep accurate business records.

Having an accountant review your financial records is always a good idea as we head towards the provisional tax deadline. Bookkeeping is one part of the process, but the accuracy of the classifications and the correct application of tax laws will be where you can benefit most. Find an accountant who you can relate to and who is a good fit for your business, the benefit of this will far outweigh the cost of their services!

Yours in simplifying finance,

PS: The best place to start is to ensure that your bank account is fully reconciled at each month end.