It is imperative that you maintain good bookkeeping records if you intend to, or have started a new business. Accurate records will keep you abreast of the company’s historic as well as its present financial situation. Basic bookkeeping for new business start ups is not that difficult to set up, and if kept up to date will not require too much time to maintain.
An efficient accounting system will aid you in identifying problem areas in your corporation which might need your attention. You will know which section of the company is not profitable and you will have the time to sort out the problem. Any financial information that you require for periodic statutory returns will be available when you need it.
It is imperative that the system you choose is easy to understand and use. It should be reliable, accurate and consistent. The most used system which is normally taught in college and high school accounting subjects is one called a double-entry system. In this system each transaction is recorded twice. The procedure is to debit one account, and credit another with the same amount.
An example for this type of system would be if you purchased stationery for the business. You will need to debit your stationery account. When you look at this account, you will be able to see exactly how much you have spent on this particular expense. The credit side of the entry will be either to your bank account or your cash account. This entry will effectively decrease the amount of money that you have on hand, or it will increase your overdraft balance.
You could opt for a single entry accounting system. You will need to obtain a columnar record book or you could use a spreadsheet system on your computer. Each expense is recorded once only.
Basic bookkeeping for new business start ups could use computerized systems that are available. These are very easy to use and training is available. A computerized system also gives you the ability to produce daily financial statements as required.
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