Record keeping and Bookkeeping

Introduction

As an Entrepreneur, you obviously will want to make a lot of profit. Profit comes from customers. When customers buy your products and services you are naturally entitled to make the profit. In order to attract customers, you need marketing plans and developed products and services. For which, you need capital. You also need to file tax returns. Capital comes from investors and other partners also. In the whole process, the one thing that has been there always is Capital. Capital or money undoubtedly forms an essential part in the smooth running of your business. But, when you are in a business, you obviously play with big figures. To ensure, proper working of your company you need to maintain these big figures. To maintain these big figures we need bookkeeping and record keeping. Mentioned below in detail is what do these two terms imply and how do they work.

Book keeping

Book keeping is nothing but the record of all the financial transactions of your company. It records each and every penny you have used, earned or spent under the name of your company. It is considered to be the subset of accounting. A bookkeeper is generally hired to maintain the records and entries. He generally works under the accountant of the company.

Record keeping

Record keeping is done keeping certain things in mind;

• All the revenues and expenses made,
• The Cash Expenditure in detail,
• All Inventory records,
• Accounts Receivable and Payable with every transaction and,
• All the Tax Records.

When it comes to small business, its owner may use some kind of software to maintain all the records rather than hiring someone. However, when you talk about big companies, they have accountants and bookkeepers, sometimes more than one, depending upon the nature and size of the company. These records will help you maintain all your financial statements. Hence, your budget plan will remain more updated. The clear records will help you keep a clear tab on every investment you make. It will save your time and help you organize your cash in a more effective way.
Tracking your financial performance will become easy and less time-consuming. A proper table is maintained and entries are made on daily basis. There are two methods of making entries;

• A single entry book keeping. Rarely used now-a-days.
• A double entry book keeping. Double entry bookkeeping is preferred more and is more effective.

Your record keeping should be done in a way that it is easy to read. It is done for your convenience and hence should be easily readable for you. Every transaction should be mentioned, no matter how small it is. It will help you tackle any kind of money issue and dealing with investors will become a lot easier. We, at LegalRaasta, can provide you bookkeeping services.

This article has been contributed by Simmi Setia, Content Writer at LegalRaasta, an online portal for GST Software, GST Return Filing, GST Registration, Section 8 Company Registration, Nidhi Company Registration, IEC Registration, Fssai License, File ITR Online.