Ten Bookkeeping Basics

With so many small businesses and start-up entrepreneurs popping up every day in the UK bookkeepers have never been in higher demand. Bookkeepers are in many instances the backbones of companies, working hard to keep companies on the right track at all times. With this in mind there has certainly been an increase in people choosing to take Bookkeeping Courses in London, with many people working hard to ensure that they are able to be the best bookkeepers possible, learning that there is now no room for mistakes.

But what exactly does bookkeeping entail?

Bookkeeping varies from role to role however there are aspects in which are commonly associated with the title.

10 of the most common types of bookkeeping for small businesses include:

Cash: All of the transactions of businesses are required to pass through a cash account meaning that it is vital for bookkeepers to keep two journals – These are cash receipts and cash disbursements. Keeping up to date with these journals allows for bookkeepers to track activity efficiently.

Accounts receivable: Bookkeepers that work for small companies that sell products and earnings not only have to keep track of what comes in but also what is expected to come in – This is often referred to as accounts receivable. Accounts receivable is money that is due from customers and it is important that this is kept an eye on so that books can always be as accurate as possible.

Inventory: Products that are stocked on a shelf or in a warehouse are what you called an inventory – These should be carefully accounted for and tracked as they are not only products, but also money. Bookkeepers should always know exactly what is in stock and have easily accessible documents to refer to.

Accounts payable: Accounts payable refer to what money business need to pay out. It is a bookkeeper’s job to ensure that they know exactly what needs paying out each month, keeping a log of what comes out in order to make sure that no payments are missed and no payments are made twice.

Loans payable: Bookkeepers are required to keep track of any money that the companies that they work for borrow, ensuring that the companies that they work for are making the most efficient and superior repayment choices.

Sales: Bookkeepers are required to track all money coming in from sales for the companies that they work for, recording all sales in an efficient and timely manner accurately so that businesses can constantly know where they stand and how much money they are bringing in on a weekly/monthly basis.

Purchases: The best bookkeepers keep separate purchases accounts tracking items bought by the company that they work for. This is a key component when it comes to tracking cost of goods sold, with this total having to be deducted from sales figures to determine a company’s gross profit.

Payroll expenses: Payroll expenses are for many companies the biggest cost and it is a bookkeeper’s job to ensure that payroll documents and figures are as accurate as possible at all times always meeting tax and other government reporting requirements.

Owners’ equity: Bookkeepers should keep track of how much each business owner puts into the company that they work for. This is incredibly important.

Retaining earnings: Bookkeepers keep track of all retained earnings. This enables companies to track profits which are reinvested into business and not paid out to owners.  This is very easy but especially important as it enables companies to track how well they are doing.