Whether you do your bookkeeping yourself or hire someone to do it for you, certain elements are essential to properly maintaining your books. Some of these elements are run more regularly than others to keep your books up to date. Other elements are completed in a specific time period required to complete the business task.
Transaction recording
Bookkeeping uses journal entries to record debits and credits. Every financial transaction has an entry in the general ledger, and everything needs to be tracked in one place. The general ledger will list the account number to which the debit or credit applies. The best accounting software automates many of the processes of regular debit and credit journal entries and eliminates errors that can occur in data entry.
Sending an invoice
If an invoice is not created at the time of the transaction, the bookkeeper will create and send an invoice for the funds that the company needs to collect. The bookkeeper enters relevant data such as date, price, quantity, and sales tax (if applicable). When you do this in your accounting software, it creates an invoice and makes a journal entry that debits your cash or accounts receivable account and credits your sales account.
Creating basic financial statements
The information collected in bookkeeping is used by accountants and business owners and therefore forms the basis of all financial statements produced. Most accounting software can automatically run common financial statements such as income statements, balance sheets, and cash flow statements. Business owners and accountants can use these statements to gain insight into a company's financial health.
Completion of payroll calculation
At the end of every pay period, bookkeepers accumulate employee pay stubs, including hours worked and wages. From there, your total salary will be determined taking into account applicable taxes and withholding. Payroll payment is completed and issued. In accounting software, the main entries for gross payroll are a debit to the compensation account and a credit to cash.
