Bookkeeping is defined as the activity of keeping records of the financial affairs of a business. Practically speaking, the bookkeeping function exists to assist management in carrying out a broad range of duties and achieving firm objectives, including:
- Managing the company through financial analysis,
- Tax reporting and compliance,
- Financial reporting to lenders and investors, and
- Business planning and growth strategies
Advances in technology have transformed the marketplace, creating opportunities for small business to capitalize on efficiencies and exposure made possible by big data and social media. The following steps are becoming routine procedures in the modern workplace, and they represent best practices for me.
- Utilizing accounting software applications in maintaining company books. Accounting software, such as Quickbooks, can assist business owners in efficiently producing financial reports, managing cash flows, and planning business strategies.
- Storing records and documentation electronically. As economic standards and compliance requirements continue to transition toward electronic mediums (i.e., web-based applications, cloud computing, remote accessibility, etc.), storing business records electronically remains a popular trend. This practice can be achieved through desktop scanners, computer hard drives, software applications, or outsourced vendor solutions that provide web-based technology.
- Performing electronic data back-ups & storing files off-site. New methodologies for business operations present new risks to achieving objectives. Owners might consider procedures such as electronic back-up and off-site storage to protect information from catastrophic events, as well as, system failures.
- Identifying significant classes of transactions and implementing processes to capture information. Within the modern business environment, every industry is different and each business within an industry possess traits that make accounting for its financial affairs unique. As such, I believe management should identify the various types of transactions that comprise business operations (significant transaction classes). Upon identifying significant transaction classes, I suggest documenting the information that must be captured, as well as, the people responsible for capturing information necessary to properly account for these items. Finally, processes are designed and implemented to place these people in position to capture the important information of the business’s financial activity.