Steps of Bookkeeping for Small Business

Bookkeeping is an initial step of account which enables to maintain, reconcile the record of income, expenditure, liabilities, AP and AR in organized manner for evaluating revenues.

Ledger Creation

Types

• Traditional method of maintaining hard copy of the ledger.• Modern accounting software and personal finance

software.

Why?

• To maintain current balance account including cash in hand, cash in bank, expenditure, revenue and other ancillary accounts.

Recording Payments

Types

• Tax• Utility Bills• Salary payments • Invoices paid • Memorandum

Why?

• To maintain records of payments including date, payee, category, memorandum and record of the cheques.

Recording Receipts

Types

• Received invoices• Sale of the product • Debtor cleared debt • Sale of an asset

Why?

• To maintain the record of incoming money.

Scheduling Upcoming Payment or Account Payable (AP)

Types

• Recurring payments• Rent• Utility bills

Why?

• For getting prepared to meet future expenses by extracting the idea of prospective income and expenditure.

Scheduling Account Receivables

Types

• Debtors’ payment• Outstanding rent • Income through sale

Why?

• To eliminate the risk of getting the cheque bounced which will be received from your client.

Reconciliation

Types

• Traditional paper-bound way of cross-examining transactions

• Modern soft-copy way of automate reconciliation.

Why?

• To avert the possibility of errors, double entries and incorrect entries in ledger.

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