1. Let’s Start with the Basics. What is Bookkeeping?
Bookkeeping is a recording of every financial transaction using either paper tracking, spread sheets or an accounting software like Quick Books. No matter what method is used it is important to apply accounting standards which are set by the Accounting Standards Board in accordance with generally accepted accounting principles (GAAP). A bookkeeper’s job is to record all the financial transactions of your company in a timely and accurate manner. Once the recording is done, the business owner can look at the numbers which can provide insight into all aspects of their business allowing them to make informed business decisions.
2. What Does a Bookkeeper Do?
A bookkeeper records all of your company’s financial transactions such as: sales, business expenses, payments, asset purchases, investments, loans, and lease payments. Other responsibilities include invoicing customers, paying employees, balancing books, preparing recurring transactions (e.g., depreciation), preparing remittances for taxes, doing monthly reconciliations of accounts payable and receivable plus bank and credit card reconciliations as well as key balance sheet accounts reconciliations.
3. What is the Main Benefit of Hiring a Bookkeeper?
Many business owners do not realize that a large number of companies fail in the first years of operation. One significant reason that companies do not make it is because of inadequate financial management. When you hire a bookkeeper, you are hiring an expert. Their job is to make sure your books are accurate through accurate recording, reconciliation, and reporting. While bookkeepers deal with all the necessary financial transactions, you can dedicate yourself to improving your business, expanding, and acquiring new clients. At first glance, a company might think hiring a bookkeeper is an added expense. But, in truth, hiring a good bookkeeper is an investment that will bring your organization long lasting benefits.
4. Bookkeeping Operates Under Strick Standards
Bookkeeping is based on accounting standards for recording transactions which are setting by the Accounting Standards Board in accordance with
generally accepted accounting principles (GAAP). Canadian private businesses can use one of two accounting standards – International Financial Reporting Standards or Accounting Standards for Private Enterprises.
5. What Professional Training Does a Bookkeeper Need?
When you are looking to hire a professional bookkeeper, look to see that they have a two-year diploma in a related field such as accounting, prior bookkeeping experience plus good computer and organizational skills. As a general rule, bookkeepers in a firm usually have an accountant supervisor whose role is to review the bookkeeper’s work and therefore minimize the possibility of error.
6. What is the Difference between Bookkeeping and Accounting?
Bookkeeping is a sub activity of the accounting. Bookkeeping is based on recording, reconciliation, and monthly reporting. Accounting is a much larger field of expertise and includes preparation of all types of tax documents, annual budgets, financial projects and documents for banks, investors, and potential buyers. Preparing these financial documents reduces the financial risks for both institutions and individuals who are making important financial decisions. Unlike bookkeepers, accountants need to have specific formal training and valid certifications.
7. Do I Need Backup Documentation?
There are no ifs, and or buts, you always need to keep your important financial documents for at least seven years. If CRA decides to do an audit of your company and its financial records, you will need documents to back up the financial entries in your books. This cannot be emphasized enough.
8. Is It Better to Use an Accounting Software System or are Spreadsheets enough?
As mentioned before, financial transactions can be recorded with an accounting software system or with spreadsheets. Accounting software uses an automated double entry bookkeeping system. Spreadsheets are a less reliable method because there is only one entry per transaction. Consequently, using spreadsheets may give an inaccurate picture of a company’s financial performance and incorrect tax information. When this happens, a business owner can make bad decisions because the information he is basing his decisions on is faulty.
9. What Is “T” Accounting?
It is process of recording two elements a debit and credit for every financial transaction. It is called “T” accounting because the debit side balances with the credit side – making the T. When assets are increased, they are considered debits. When liabilities or equity is increased, these are considered credits. The credits and debits must always be equal.
10. What is a General Ledger?
A general ledger is a means for keeping record of a company’s total financial accounts. The ledger usually includes all assets, liabilities, equity, expenses, income, or revenue. Based on a general ledger we can create the financial statements for a company such as a balance sheet and an income statement.
11. What are the Main Principles Embraced at G.Synergy Bookkeeping?
Here at G.Synergy Bookkeeping our main accounting principles are integrity, accuracy, reliability, timeliness, consistency, and simplicity. A good bookkeeper records the correct financial transactions, in the proper place based on the double-sided entry system (a debit and a credit for every transaction). Recording the transactions when they happen, and not waiting, is one way to help ensure accuracy. In addition, simplicity is very important. Data should be entered only once. In this way, the risk of error is reduced. Finally, consistency demands that data is always recorded in the same manner.