A good accounting system is an essential part of running a profitable business. You need this type of information to enable you to see both the historic and also the present financial situation that your business is in. A basic bookkeeping for new business start ups system is quite simple to implement.
With an effective system in place you will be able to identify if there are any problem areas in your company. You will be able to check your financial statements to determine which sections of the business need more attention. The statistics and figures that you require for statutory submissions will be on hand as and when you need them.
It is important that the system is easy to use and understand, consistent, reliable and accurate. The system that is most generally used, and which is taught in high school and college accounting classes is the double entry system. This entails recording each transaction twice. One account will be debited, and another will be credited with the amount.
An illustration of this system could be shown when you purchase stationery. You will be required to debit the expense account, stationery. This will ultimately indicate how much you have spent on this expense in total. The other side of the entry would be a credit to your bank account or the cash account. The effect of this entry will show you how much money you have in cash or in your bank account, or the balance on your bank overdraft.
An alternate system is called a single-entry accounting system. This system requires each expense to be recorded once only. To implement this system you may need to obtain an accounting book with several columns, or you could use a spreadsheet computer program.
Basic bookkeeping for new business start ups could use computerized systems that are available. These are very easy to use and training is available. A computerized system also gives you the ability to produce daily financial statements as required.
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