Accounting plays a crucial role in business whether it may be small or big, however, some people ignore the accounting or give them very low priority but it should not be treated as an afterthought. Maintaining balanced accounting books is very much important as they can help you in forecasting the future of your business and take necessary steps if needed.
In this blog, we will let you know the tips that will help you in keeping your books of account balanced.
- Pay attention to your cash flow: As you perform weekly & monthly financial reviews, consider producing a cash flow statement. These cash flow statements provide you a broad understanding of cash movement within your company. These statements help you in anticipating the expenses & income of your business.
- Pay close attention to receivables: When you receive money from your clients then you feel very happy and excited but managing that receivables are not fun, therefore utmost attention must be paid in it. When you receive money from your client then that amount should be applied to their invoice and marked as paid. But when you receive many payments in a single day then there are many chances that you forget to record those receivables due to lack of time or multitasking. And these mistakes or carelessness can cause you a lot in many ways. Thus, you should keep close attention to your business receivables and keep track of your transactions as they happen.
- Record Cash Expenses: When you are an entrepreneur it is important that you track all the expenses that are related to your business. This will help you in giving a more accurate sense of the overall profitability of your business. So you should keep recording your business expenses immediately so that anything is not missed.
- Understand the double-entry bookkeeping: We can see today many businesses taking the help of accounting software instead of physical books, but still understanding the double-entry bookkeeping is very important. The basic idea of double-entry bookkeeping is that whenever you make a purchase for your business, you not only record the expense related to that purchase but also what you gained from that transaction.
- Prepare Financial Statements: You should prepare financial reports on a monthly or quarterly basis as they will help you in analyzing the health of your business. The balance sheet shows a snapshot of your business’ assets, liabilities, and equity at a specific moment in time. The income statement, on the other hand, shows the income and expenses that took place over a defined period, as well as your business’ “bottom line.” And finally, the cash flow statement helps you to analyze how your cash balances have changed over time.
- Maintain clear communication with your accountant: When you have appointed professionals like accountants, bookkeepers, etc then you should stay in touch with them. You should ask them if you don’t understand anything and consider them as a part of your team.
- Leverage technology: To keep accounts accurate is not an easy process and when your business is growing rapidly then this process becomes more complex and stressful. Therefore adopting technology is advisable and using accounting systems are much easier in using and maintaining business transactions compared to physical ledgers.
So, these are some of the most useful tips that can help you to keep your books balanced. We Chaturvedi Associates are among one of the most popular consultants in Bahrain (Working as an Audit company in Bahrain) in its area fulfilling different demands as well as needs of its customers running VAT consultancy, Audit company, Accounting and Bookkeeping in Bahrain, UAE as well as global markets. Thus, you can Contact Us for the best services for your business.