What is bookkeeping?

Bookkeeping is the process of recording, organizing, and maintaining financial transactions and records of a business. It involves tasks such as recording income and expenses, reconciling accounts, managing payroll, and generating financial reports.

Why is bookkeeping important for a business?

Bookkeeping is crucial for several reasons:

• It helps monitor and track the financial health of the business.

• Accurate records are necessary for fulfilling tax obligations and compliance.

• It provides insights into cash flow, profitability, and areas for potential growth.

• Well-maintained books facilitate decision-making and securing financing from lenders or investors.

What are the basic bookkeeping tasks?

Basic bookkeeping tasks typically include:

• Recording and categorizing income and expenses.

• Reconciling bank and credit card statements.

• Managing accounts payable and accounts receivable.

• Processing payroll and related tax filings.

• Generating financial statements (e.g., balance sheet, profit and loss statement).

Should I do my own bookkeeping or hire a professional?

It depends on various factors, such as the size of your business, your accounting knowledge, and the time you can dedicate to bookkeeping. Small business owners with limited transactions may choose to handle bookkeeping themselves, using accounting software. However, as the business grows or if you lack accounting expertise, hiring a professional bookkeeper or outsourcing the task can ensure accuracy and free up time for other business priorities.