The face behind
Weld Street Bookkeeping

Bookkeeping is the process of tracking and recording a business’s financial transactions. These business activities are recorded based on the company’s accounting principles and supporting documentation. Supporting documentation includes bills, receipts, invoices, and purchase orders.

Bookkeeping is just one facet of doing business and keeping accurate financial records. With well-managed bookkeeping, your business can closely monitor its financial capabilities and journey toward heightened profits, breakthrough growth, and deserved success.

At first glance, bookkeeping and accounting may seem interchangeable. While it may be easy to confuse the two, they are not the same thing. Accounting is the umbrella term for all processes related to recording a business’s financial transactions, whereas bookkeeping is an integral part of the accounting process.

Common examples of bookkeeping include:

• Recording financial transactions

• Posting debits and credits to a journal

• Preparing financial statements

• Processing payroll

Unlike accounting, bookkeeping zeroes in on the administrative side of a business’s financial past and present. Accounting, on the other hand, utilizes data from bookkeepers and is much more subjective.

Common examples of accounting include:

• Reviewing and analyzing financial statements

• Preparing adjusting entries

• Performing audits

• Filing relevant tax returns

Without bookkeeping, accountants would be unable to successfully provide business owners with the insight they need to make informed financial decisions.

1. Access to detailed records of all transactions

   By logging and keeping track of all financial transactions, you will have easy access to any financial information you might need. To make it even easier, bookkeepers often group transactions into categories. When it’s finally time to audit all of your transactions, bookkeepers can produce accurate reports that give an inside look into how your the business is doing.

2. Ability to make informed decisions

   Because bookkeeping involves the creation of financial reports, you will have access to information that provides accurate indicators of measurable success. By having access to this data, businesses of all sizes and ages can make strategic plans and develop realistic objectives.

   Examples of financial statements that can help with decision-making include:

   • Balance sheets

   • Income statements

   • Cash flow statements

   Not only can this help you set goals, but it can also help you identify problems in your business. With an accurate record of all transactions, you can easily discover any discrepancies between financial statements and what’s been recorded. This will allow you to quickly catch any errors that could become an issue down the road.

3. Better Tax Preparation

   When it’s time to file your taxes, you’ll need to comply with the Internal Revenue Service’s (IRS) legal regulations and systems that govern their finances.

   Some of the most common documentation businesses must provide to the federal government include:

   • Financial transactions

   • Financial statements

   • Tax compliance

   • Cash flow reports

   By staying up to date with your bookkeeping throughout the year, you can help alleviate some of the stress that comes with filing your taxes.

1. Consider a phased approach

Trying to juggle too many things at once only works to put your organization in danger. If you’re looking to convert from manual bookkeeping to digital, consider a staggered approach. Overhauling all at once can be overwhelming and discouraging, so it’s best to take it slow and make meaningful and intentional shifts.

2. Keep your general ledger current

A general ledger is a collection of accounts that classify and store all records associated with a company’s financial transactions. The general ledger includes balance sheet accounts (liabilities, equity, assets) and income statement accounts (revenue, expenditure, gains, losses).

Your general ledger should be up to date so that your bookkeeping software is able to provide functionality that you can navigate easily. QuickBooks is an excellent option for novice and seasoned digital bookkeepers alike.

3. Plan for taxes throughout the year

Whether it’s updating your books or keeping in contact with your tax adviser, maintain your business’s financial records and expenses throughout the year. That way, you can be well prepared when it’s time to file taxes with the IRS. Without any hiccups or last-minute scrambles, you’ll be able to enter tax season confidently.

4. Keep your personal and business finances separate

As you dive deeper into the bookkeeping process, it may be tempting to blur the lines between your personal and business finances, but it’s not the best idea. By avoiding this, you’ll reduce the risk of triggering an IRS audit and will allow an accurate picture of your business finances.

Some common ways to help keep your personal and business finances separate include:

• Utilizing a business credit card for all business expenses

• Setting up separate checking accounts

• Keeping all personal and business receipts organized and separate

By following these tips and diligently working to keep your personal and business finances separate, you’ll get a clear view of the performance of your business, while minimizing the risk of accidentally misrepresenting your business’s finances.

1. Do I have the expertise?

How does your accounting and bookkeeping experience size up? You may be hoping for the best and have a few college courses in your back pocket. Even with these tools, you may not have the expertise you need to handle the responsibilities of a bookkeeper.

If you’re unfamiliar with local and federal tax codes, doing your own bookkeeping may prove challenging. On the other hand, if you have in-depth tax and finance knowledge beyond the bookkeeping basics, you may be able to get the job done.

2. Do I have the time?

Bookkeeping can be time-consuming and tedious. If you’re a new business owner, you’re likely already spread thin. Adding bookkeeping to the mix may overwhelm you. But if you have the time to dedicate to updating your books regularly, doing your own bookkeeping may be feasible.

If you’re like most modern business owners, odds are you didn’t become one so that you could practice professional-level bookkeeping. Outsourcing the work to a seasoned bookkeeper can allow you to focus on your business plan and growth.