Accounting and bookkeeping are cornerstones of business success. Every small business owner should set up robust accounting and bookkeeping processes when starting a company. Keep reading for our introductory guide to small business accounting and bookkeeping for small business owners.
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What are accounting and bookkeeping?
Accounting describes the practice of analyzing financial transactions on your business bank accounts. This includes looking at depreciation, operational expenses, profit margin, etc. Accounting also includes the preparation of cash flow statements, balance sheets, and profit and loss statements.
Bookkeeping, on the other hand, refers to keeping a record of business transactions. This involves recording invoices and payments and recording financial transactions chronologically.
The two processes are not only strongly linked, but play a crucial role in the success and financial health of small businesses. This is why the processes should be streamlined and improved. Online accounting and bookkeeping software can help reduce errors and optimize your processes.
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Software for accounting and bookkeeping
There are several well-known online accounting platforms available for business users. The systems are cloud accounting software, allowing you to access your business accounts from anywhere. Some of the best software solutions for accounting and bookkeeping include Xero, QuickBooks, Kashflow, and Sage.
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Business bank accounts
Establishing a separate bank account for your company comes with several benefits - it makes your business seem more professional and therefore more attractive to investors. Sole traders may also be able to claim running costs as expenses, which is an easier process with a business bank account.
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Payment collection
Collecting payment for products or services is a crucial part of managing your business finances. Any errors and issues in the process can lead to cash flow problems, meaning any automation of the collection process can improve your company's overall financial health. It may be worth considering setting up a direct debit solution.