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Crucial accounting & bookkeeping numbers

26th Oct 2016
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Crucial accounting & bookkeeping numbers

Businesses, small - medium or large, at the time of inception are extremely energetic at whatever they do. With great vision, mission and the drive, they literally use anything and everything to make their business succeed. They start with their own selves, and then keep on adding professionals to the drive.

So start with, they succeed in keeping a track of the finances, if not always with a software or a written format which we call bookkeeping, then at least in their brains. This is the most commonly used methodology in that surge of setting up the business. However; it does not always allow them to have that accurate and comprehensive update about income and expenditure. This finally ends up in a situation where the business does not have the correct picture of where is it losing out big time, or is to lose out and where is it actually making profits. This picture does not include project details though. 

Accurate books of accounts for any business are one of the most crucial aspects of running that business. Combining accounting and bookkeeping responsibilities with project assistance, administration, safety or reception; will not work for sure - check out the past experience of businesses alike.

Basic set of accounts

Do you really feel, aforementioned professionals, would be aware whether a cash book is used to record money entering and leaving the business or for something else. Purchase ledger to track outgoings, wages book, a sales ledger, where to maintain a record of money received and amounts still owned, salary payments and most importantly the national Insurance contributions; hope these are not some of those alien terms for your so called multitasking professionals.

Because if it is so, you are at optimum risk of suffering a loss due to the unavailability of important information required to make informed decisions. If your business has indicators such as accounting and bookkeeping professionals to display the financial health, you also come to know when you need additional help in form of additional staff and how much is it necessary. 

Bigger is better, but this rule is not applicable everywhere. Several small businesses get engrossed in doing more work, resulting in increased gross income. But does that really mean more profit; most of the times – No. in reality it is quite opposite. To do more work, more staff is hired, more equipment are purchased or rented, but still everything turns out to be a big loss. But why? The reason being, what small businesses were able to control, such as costs, miscalculations and time spend on projects, is now too much a task for them to handle on their own. 

Accurate accounting and bookkeeping, monitoring all these can be done in a detailed manner. Changes can be initiated and implemented well in advance. Situation like payroll can’t be done due to maxed out line of credit, will never arise. Reviewing and monitoring the financial health of the business will become a routine which would be conducted by the bookkeeper or the accountant, as they are the ones equipped with the expertise to help you in making informed decisions and keeping your business stable.

Conclusion

Whichever option you decide to go with, either have accountants and bookkeepers from an outsource solution provider work on to your premises, or you may outsource your entire accounting activities to them, ensure you spend ample time with them understanding the basics of bookkeeping. If something is more than doing the business, is to understand the numbers behind of your business. Understanding accounting & bookkeeping numbers behind your business is more important as that is the only way you can make it thrive and survive.

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