Essential Bookkeeping Tips for Self-Employed
November 18, 2021
The Essential Bookkeeping Tips That All Self-Employed Professionals Should Know
Running one’s own business is a learning experience as you need to look after every aspect as it might later hit you when least expected. Accounting and bookkeeping are elements that cannot be simply done if you do not hire a professional to look into things for you. If it still seems too early in the day to hire an exclusive employee to provide your firm with bookkeeping services, then you need not despair as you can outsource bookkeeping too.
However, until you don’t find a suitable professional, you can run the show at least temporarily by keeping in mind a few pointers:
Do not discard documents:
Financial documents are to be kept. Keeping invoices and bills in order can be irksome, but even a small business does run up expenses, and this expense will help you save in the long run. Whatever purchases you make lower your taxable profit amount, but the best part of the expense is that they can be claimed back. However, the rule of thumb here is “Do not claim unless you have proof,” as if there is an investigation held later, you need to be able to furnish those documents!
Also, if you have your documents in order - it will be easier for you to provide the same when you do outsource bookkeeping work.
Do not mix the business with the personal:
Working in your own business becomes challenging as far as bifurcating your expenses and your business’ expense goes. Keeping separate bank accounts is the way out here.
Do not overlook your income:
Whatever income you generate does not come by easily. So, you need to have a smart system in place to track this. If you do not keep track, then there are chances you might not be able to do proper tax planning, which is why bookkeeping services are invaluable.
Do not play by the ear:
It is necessary to plan well in advance so that you end up investing wisely. Therefore, having a tax advisor onboard also can speed the process up.
Some terms that should simplify things in the meanwhile:
It is used to track all money you have borrowed and are yet to pay to suppliers, banks or the government. Apart from these, any other sources that you borrow from too would be part of this account.
It is the converse of the former as it keeps track of all money you owed by others & yet to receive. Thus, effectively, in this case, you are the lender.
These are things owned by yourself of your firm & varies from buildings and land too even cash, furniture, vehicles and tools.
The balance sheet provides a comprehensive view of what you and your business owe. Assets, liabilities and your business capital are featured here.
Bookkeeping is the recording of day-to-day financial transactions of your business. Check to see that records are accurate as well as up to date.
It is not dealing with profit but with the assets that belong to you as the company’s owner.
The gradual loss of value of an asset due to use, wear and tear. The value of this decrease is depreciation.
Costs of Goods Sold:
The costs associated with what is ultimately going to be sold to customers like products, services.
Apart from these, there are other aspects like equity, expense, general ledger, income Statement, trial balance, journals, liabilities, revenue, etc.
And the list goes on. Thus, having a reputed firm like Doshi Outsourcing handling your task of accounting, bookkeeping will assist you in running the business hassle-free and more effectively.