LEARN HERE

Monday, March 7, 2011

ESSENTIAL COMPONENTS OF BOOK KEEPING SYSTEM

The essential components of bookkeeping system are compulsory for every small business owner who desire to keep proper records. Bookkeeping systems are the backbone of every small business. Without the proper implementation of a good bookkeeping system, the organization will lack the adequate information needed to make quality financial decision. An effective accounting system is a fundamental tool in the hand of every serious minded business owner or entrepreneur. Those who neglect it suffer, and those who embrace it have a story of success to tell.

Though some business owners do not see the need to keep abreast with facts of establishing effective book keeping system within their organization, the truth remains that it is an integral and important key in running a successful business whether small or big. It is my intention in this article to give you a proper foundation in designing a formidable accounting system. This can be used for both your offline and online business. They form the foundation upon which you will receive empowerment for the making of intelligent business decisions. They are as follows:

    1. Processes System: Process system is a component of bookkeeping System that enables the business owner to know is responsible for a specific task (Who does what) and the procedures for effective and efficient execution of task (How they do the job).

    2. Filing System: This is a component of bookkeeping that enable you to organize your files so that you can lay your hands on anyone needed at the appropriate time. Being able to lay your hands on your files or document when you need them makes your work faster.

    3. Chart of account: This is a component that shows what the numbers do.

    4. Reporting package: This is a component of bookkeeping system that enables a business owner to easy access to structural information that enables him or her to run his or her business successfully.

    5. Transactional Record System: This is a soft ware use to record financial transactions. A good example is Simple Accounting, QuickBooks and Excel.
 
For the purpose of the size, your business structure, your industry, your internal control requirements, your system needs to be efficient and effective. You need to design it in such a way that it becomes easy to understand and use. Following the above components will enable you to design and or choose accounting systems that will effectively and efficiently serve you and your bookkeeper.
 
The above five components of bookkeeping will help you in great deal organize a high impact financial tracking and accounting. Though your needs will increase as your business grows, this foundation will give you the required information to make well informed decision when the need arises for you to update your accounting systems.

Wishing you the best in your business!