Accounting software is used to help businesses of any kind to keep track of the money that they have and who it has to go to. Learn what features it has and the different types to buy.
There are a great deal of accounting software programs that you can choose from in order to help make running your business easy. A few of the programs are designed to be used only for large businesses while others might be used on a personal basis. It is important to know what type you will need to use and the features it can bring to your business.
Accounting software can be very simple or complex depending on your needs. The most common are used to record and process account receivable and payable. This will allow the business to keep track of the various vendors that they have and how much money they owe. In turn this will help them to know how much money they have at any given time.
Some other programs will go so far as to create an invoice that can be printed out and sent off to bill clients and for other debt collection processes. They will also have a feature which will create a time-sheet record keeping in order to keep track of the hours that an employee has worked.
The more personal programs are designed to be used in the home and is very simple. It will help you to make a checklist of your household bills and the budget you wish to create every month. It will keep track of how much you owe, when it needs to be paid, and how much money you will have left over at the end of the month.
There are higher quality programs like that of the construction accounting software which is designed to be more complex. These are used for large businesses who deal with thousands to millions of dollars on a weekly basis. They have features that keep track of every vendor allow the user to customize it when needed.
Saturday, May 8, 2010
Small Business Bookkeeping Software - 7 Easy Steps To Get The Best Solution
Get the right small business bookkeeping software and you will save time, money and stress. Now up to a point a manual bookkeeping system is all you need. One good manual system is the Dome Simplified Monthly Bookkeeping Record. You can pick this up at Office Depot or Office Max. That will even work OK with a couple of employees. But if you're ready to step up to a computer system, you face a flood of products to pick from.
Following are 7 tips to help you choose the best bookkeeping system for your small business.
Tip 1: Decide what you want.
If you're upgrading from a manual system or switching from a bookkeeping service, there must be a reason. Decide what you want from a bookkeeping system and you're more likely to get what you need. The best system should save you money.
Tip 2: Free might work.
A free system might work. Microsoft offers a free version that's limited, but may be good enough. Usually if you have any employees a free system isn't for you. But if you don't have employees, consider the Microsoft free option.
Tip 3: Simple will work.
Buy more system than you need and you'll pay hidden costs. Learning any system and using it is part of the continuing cost of software. An overly complex system will cost you as long as you try to use it. Simple is good if that's what you need.
Tip 4: Software in a box.
Look at the major accounting software suppliers like QuickBooks and Peachtree. They sell software in huge volumes and there are thousands of users who have gone before you. No need to be a pioneer.
Tip 5: Easy upgrades.
Cheap software may be a dead end. If you ever need to upgrade, is there an upgrade version or do you get to start all over with a new software vendor? Maybe you can't even easily transfer your records to the new software. Oh my!
Tip 6: Online for less stress.
Online software may be an option. Especially for payroll, you can forget about keeping up with endless regulation changes and just let the software people worry about that. Lots of bookkeeping automation is available really cheap with online accounting software.
Tip 7: Who can you call?
What happens when you have problems? Who can you call? Software has been known to just lock up and there you are. So know who can help you if you get in trouble, because trouble will come with any software.
The right small business book keeping software makes running a business easier and less stressful. The problem in choosing the best software is you have so many choices. Think through what your real needs are before you buy anything. Pick overly complex software and you'll pay too high a price in learning and using the programs. But on the other hand, buy too little system and you may find yourself stuck and forced to learn a whole new system. The good news is that you have several options from major companies that are already used by thousands. You can easily buy a proven product that will do the job.
Source:
Buzzle.com
Following are 7 tips to help you choose the best bookkeeping system for your small business.
Tip 1: Decide what you want.
If you're upgrading from a manual system or switching from a bookkeeping service, there must be a reason. Decide what you want from a bookkeeping system and you're more likely to get what you need. The best system should save you money.
Tip 2: Free might work.
A free system might work. Microsoft offers a free version that's limited, but may be good enough. Usually if you have any employees a free system isn't for you. But if you don't have employees, consider the Microsoft free option.
Tip 3: Simple will work.
Buy more system than you need and you'll pay hidden costs. Learning any system and using it is part of the continuing cost of software. An overly complex system will cost you as long as you try to use it. Simple is good if that's what you need.
Tip 4: Software in a box.
Look at the major accounting software suppliers like QuickBooks and Peachtree. They sell software in huge volumes and there are thousands of users who have gone before you. No need to be a pioneer.
Tip 5: Easy upgrades.
Cheap software may be a dead end. If you ever need to upgrade, is there an upgrade version or do you get to start all over with a new software vendor? Maybe you can't even easily transfer your records to the new software. Oh my!
Tip 6: Online for less stress.
Online software may be an option. Especially for payroll, you can forget about keeping up with endless regulation changes and just let the software people worry about that. Lots of bookkeeping automation is available really cheap with online accounting software.
Tip 7: Who can you call?
What happens when you have problems? Who can you call? Software has been known to just lock up and there you are. So know who can help you if you get in trouble, because trouble will come with any software.
The right small business book keeping software makes running a business easier and less stressful. The problem in choosing the best software is you have so many choices. Think through what your real needs are before you buy anything. Pick overly complex software and you'll pay too high a price in learning and using the programs. But on the other hand, buy too little system and you may find yourself stuck and forced to learn a whole new system. The good news is that you have several options from major companies that are already used by thousands. You can easily buy a proven product that will do the job.
Source:
Buzzle.com
Accounting Software Can Be Sophisticated Or Simple Bookkeeping Software
Accounting software is a system of recording financial transactions on a computer across a full range of accounting options almost invariably dependent upon the size of business being catered for. Accounting software can vary from multi million pound solutions for major public companies to simple managed lists of income and expenses.
The requirements from accounting software are diverse with the most complex and comprehensive financial accounting packages incorporating financial reporting information and managed by teams of qualified accountants supported by accounts clerks, bookkeepers and substantial input from automated data sources. At the other end of the scale a self employed sole trader might use accounting software themselves and produce a set of financial accounts for the year in an afternoon.
Different accounting standards are required from accounting software dependent upon the fitness for purpose and client needs. Double entry bookkeeping automated through a database system and probably arranged in financial modules would normally be the choice of the majority of public companies. Single entry bookkeeping would not be an acceptable accounting solution for a limited company due to audit requirements and statutory obligations.
Single entry bookkeeping does however have its place in the market place for the smaller less complex businesses who maintain financial control through a close intimate knowledge of every financial transaction. The main objective of a sole trader is more likely to be the production of the tax accounts and complete the periodic and annual tax return forms.
The most sophisticated level of accounting software in the largest companies mirrors the accounting functions in those organizations with various financial modules for accounts receivable, accounts payable, stock control, general ledger and fixed assets. These accounting modules may also be integrated with non accounting functions such as production and dispatch functions and also divided into separate modules within the accounting function.
In larger companies the sales day-book and data entry of sales turnover would often be the responsibility of one department while the accounts receivable function might be split with a specialist credit control function within that accounting module. A further division may also include sales administration and customer records. Similarly the accounts payable function might be split between the purchasing department, accounts purchase invoice department and a legal function for overdue payments.
Accounting software for smaller companies and organizations is commonly a system of data entry of prime transactions which include sales income, purchase expenses and cash and bank transactions. The prime entry of these documents being to a database which automates the double entry accounting principles and produces both accounts receivable, accounts payable and general ledger databases.
Some accounting knowledge is usually required tom operate a database accounting software system and that financial knowledge is usually available within the company as most companies that use database accounting software also employ a bookkeeper or accounts clerks to input data and in slightly larger small companies also qualified accountants to manage the accounting function.
The need for accounting knowledge in a database system is partially to understand the data entry principles and the relevancy of the rules that need to be followed but essentially understanding of accounting principles is required to understand what is happening ton the information after input. And most important, a qualified accountant has the financial knowledge, training and experience to know what the system should be producing and how to query the database to retrieve that information.
In addition to inputting the prime income and expenditure details the most benefit of a database accounting system is the level of financial control the information it contains can provide the company management and financial directorship. The accounting function also has the security of producing trial balances, periodic profit and loss accounts, balance sheets and other financial and statements for tax and control purposes.
Accounting software packages requiring little or no accounting knowledge are available.
Small limited companies must obtain accounting software based upon double entry accounting principles as in addition to producing a profit and loss account and a trial balance to demonstrate accuracy and integrity of the financial records plus a balance sheet is required for reporting purposes. Accounting standards require the limited company to have a system of financial control and accounting software is an essential tool in achieving this.
Some accounting knowledge either from the management or outsourcing the bookkeeping services is usually required with even the simplest database accounting solutions eve3n if this requires the understanding of what accounts receivable ledgers, accounts payable ledger and control accounts mean.
There are other possibilities and those businesses with a minimum of accounting knowledge can consider spreadsheet based accounting software. Accounting software compiled from spreadsheets is less flexible and often does not have the range of options a database system has due to the lack of database queries available. These disadvantages of flexibility being compensated by the fact that all entries are visible, transparent and changes can be made more easily.
Financially at the sole trader and self employed end of the business spectrum then the requirements from accounting software may be completely different. Gone are the sophistication of control accounts, trial balances and many aspects of financial control. The most important aspect of self employed accounting software is often to produce a set of accounts for tax purposes.
Self employed small business that do not require a balance sheet can use accounting software based upon single entry bookkeeping rather than double entry and with the reduced requirement for financial control then less financial queries to the system are required. In these respects the simpler an accounting solution the better and in this market an accounting solution written on spreadsheets that can produce the net taxable profit would meet the requirements.
Source:
Buzzle.com
The requirements from accounting software are diverse with the most complex and comprehensive financial accounting packages incorporating financial reporting information and managed by teams of qualified accountants supported by accounts clerks, bookkeepers and substantial input from automated data sources. At the other end of the scale a self employed sole trader might use accounting software themselves and produce a set of financial accounts for the year in an afternoon.
Different accounting standards are required from accounting software dependent upon the fitness for purpose and client needs. Double entry bookkeeping automated through a database system and probably arranged in financial modules would normally be the choice of the majority of public companies. Single entry bookkeeping would not be an acceptable accounting solution for a limited company due to audit requirements and statutory obligations.
Single entry bookkeeping does however have its place in the market place for the smaller less complex businesses who maintain financial control through a close intimate knowledge of every financial transaction. The main objective of a sole trader is more likely to be the production of the tax accounts and complete the periodic and annual tax return forms.
The most sophisticated level of accounting software in the largest companies mirrors the accounting functions in those organizations with various financial modules for accounts receivable, accounts payable, stock control, general ledger and fixed assets. These accounting modules may also be integrated with non accounting functions such as production and dispatch functions and also divided into separate modules within the accounting function.
In larger companies the sales day-book and data entry of sales turnover would often be the responsibility of one department while the accounts receivable function might be split with a specialist credit control function within that accounting module. A further division may also include sales administration and customer records. Similarly the accounts payable function might be split between the purchasing department, accounts purchase invoice department and a legal function for overdue payments.
Accounting software for smaller companies and organizations is commonly a system of data entry of prime transactions which include sales income, purchase expenses and cash and bank transactions. The prime entry of these documents being to a database which automates the double entry accounting principles and produces both accounts receivable, accounts payable and general ledger databases.
Some accounting knowledge is usually required tom operate a database accounting software system and that financial knowledge is usually available within the company as most companies that use database accounting software also employ a bookkeeper or accounts clerks to input data and in slightly larger small companies also qualified accountants to manage the accounting function.
The need for accounting knowledge in a database system is partially to understand the data entry principles and the relevancy of the rules that need to be followed but essentially understanding of accounting principles is required to understand what is happening ton the information after input. And most important, a qualified accountant has the financial knowledge, training and experience to know what the system should be producing and how to query the database to retrieve that information.
In addition to inputting the prime income and expenditure details the most benefit of a database accounting system is the level of financial control the information it contains can provide the company management and financial directorship. The accounting function also has the security of producing trial balances, periodic profit and loss accounts, balance sheets and other financial and statements for tax and control purposes.
Accounting software packages requiring little or no accounting knowledge are available.
Small limited companies must obtain accounting software based upon double entry accounting principles as in addition to producing a profit and loss account and a trial balance to demonstrate accuracy and integrity of the financial records plus a balance sheet is required for reporting purposes. Accounting standards require the limited company to have a system of financial control and accounting software is an essential tool in achieving this.
Some accounting knowledge either from the management or outsourcing the bookkeeping services is usually required with even the simplest database accounting solutions eve3n if this requires the understanding of what accounts receivable ledgers, accounts payable ledger and control accounts mean.
There are other possibilities and those businesses with a minimum of accounting knowledge can consider spreadsheet based accounting software. Accounting software compiled from spreadsheets is less flexible and often does not have the range of options a database system has due to the lack of database queries available. These disadvantages of flexibility being compensated by the fact that all entries are visible, transparent and changes can be made more easily.
Financially at the sole trader and self employed end of the business spectrum then the requirements from accounting software may be completely different. Gone are the sophistication of control accounts, trial balances and many aspects of financial control. The most important aspect of self employed accounting software is often to produce a set of accounts for tax purposes.
Self employed small business that do not require a balance sheet can use accounting software based upon single entry bookkeeping rather than double entry and with the reduced requirement for financial control then less financial queries to the system are required. In these respects the simpler an accounting solution the better and in this market an accounting solution written on spreadsheets that can produce the net taxable profit would meet the requirements.
Source:
Buzzle.com
Bookkeeping software can simplify the bookkeeping process
The advent of efficient bookkeeping software has revolutionized the way Bookkeeping Services is performed in organizations. With large volumes of accounts receivables, account payables, billing and Payroll Services to handle, organizations found it difficult to manage the different segments of bookkeeping. Competent bookkeeping software has enabled companies to work better and save on time and effort.
There is a wide range of bookkeeping software that bookkeepers can use today. The following is a list of the different bookkeeping software available and the benefits that each offer:
QuickBooks
Quickbooks Bookkeeping Software is one of the easiest to use financial software. It has an easy to use interface, simple navigation toolbars and a user-friendly graphic menu. The Quickbooks software is divided into various sections, such as the help section, customer section and vendor section. There is a help button on every option and users can go through FAQs in the quick help menu. The Quickbooks software gives users flexibility on a variety of tasks related to accounts receivable, accounts payable, payroll, inventory and banking. Other features include a general ledger and job costing tools.
Quicken
The advanced features of Quicken make it the software favorite software among accountants. In the latest version of Quicken enables users to see more of workspaces and reports at the same time. Financial data can also be viewed more easily. The tabs in Quicken enable users to easily access different functions at the same time. Summarized versions of critical information can be seen on the home page and activity center. With features such as, financial overview, cash flow center, investment centers, Quicken Billminder Gadget and Quicken account bar, Quicken is a good choice.
Peachtree
The latest version of Peachtree is packed with advanced options to enable bookkeepers to maintain accurate records efficiently. It has an easy-to-use interface, an informative business status page, input screens for (billing, payroll & invoicing), advanced reporting tools and high-end options. Bookkeepers can synchronize contact information with ACT and set up this software without any difficulty. All these advantages make the Peachtree accounting software a favorite among bookkeepers.
NetSuite
The NetSuite Accounting Software is a single, integrated suite that has advanced accounting, ERP, CRM and e-commerce abilities. With the NetSuite accounting software, bookkeepers can competently mange accounts receivables, accounts payables, general ledgers, billing and payroll amongst others. NetSuite has efficient tools for sales force automation, support management, marketing automation, global CRM, productivity management, e-commerce, partner relationship management, financial management and employee resource. With its flexibility, real-time decision making and seamless integration bookkeepers find this an easy-to-use software.
Business Works
The business works accounting software is simple yet powerful accounting software. It is flexible, easy-to-use and has integrated modules. With business works, bookkeepers can provide extensive reports and even share data with other users. Business works enables bookkeepers to manage the entire operation flawlessly.
Advantages of using bookkeeping software
o Saves time and effort
o Saves on manpower
o Enables bookkeepers to work more efficiently
o Different segments of bookkeeping can be handled with ease
o Data can be shared easily
o Errors can be minimized
Use bookkeeping software and watch your bookkeepers work more efficiently.
Source:
Buzzle.com
There is a wide range of bookkeeping software that bookkeepers can use today. The following is a list of the different bookkeeping software available and the benefits that each offer:
QuickBooks
Quickbooks Bookkeeping Software is one of the easiest to use financial software. It has an easy to use interface, simple navigation toolbars and a user-friendly graphic menu. The Quickbooks software is divided into various sections, such as the help section, customer section and vendor section. There is a help button on every option and users can go through FAQs in the quick help menu. The Quickbooks software gives users flexibility on a variety of tasks related to accounts receivable, accounts payable, payroll, inventory and banking. Other features include a general ledger and job costing tools.
Quicken
The advanced features of Quicken make it the software favorite software among accountants. In the latest version of Quicken enables users to see more of workspaces and reports at the same time. Financial data can also be viewed more easily. The tabs in Quicken enable users to easily access different functions at the same time. Summarized versions of critical information can be seen on the home page and activity center. With features such as, financial overview, cash flow center, investment centers, Quicken Billminder Gadget and Quicken account bar, Quicken is a good choice.
Peachtree
The latest version of Peachtree is packed with advanced options to enable bookkeepers to maintain accurate records efficiently. It has an easy-to-use interface, an informative business status page, input screens for (billing, payroll & invoicing), advanced reporting tools and high-end options. Bookkeepers can synchronize contact information with ACT and set up this software without any difficulty. All these advantages make the Peachtree accounting software a favorite among bookkeepers.
NetSuite
The NetSuite Accounting Software is a single, integrated suite that has advanced accounting, ERP, CRM and e-commerce abilities. With the NetSuite accounting software, bookkeepers can competently mange accounts receivables, accounts payables, general ledgers, billing and payroll amongst others. NetSuite has efficient tools for sales force automation, support management, marketing automation, global CRM, productivity management, e-commerce, partner relationship management, financial management and employee resource. With its flexibility, real-time decision making and seamless integration bookkeepers find this an easy-to-use software.
Business Works
The business works accounting software is simple yet powerful accounting software. It is flexible, easy-to-use and has integrated modules. With business works, bookkeepers can provide extensive reports and even share data with other users. Business works enables bookkeepers to manage the entire operation flawlessly.
Advantages of using bookkeeping software
o Saves time and effort
o Saves on manpower
o Enables bookkeepers to work more efficiently
o Different segments of bookkeeping can be handled with ease
o Data can be shared easily
o Errors can be minimized
Use bookkeeping software and watch your bookkeepers work more efficiently.
Source:
Buzzle.com
Small Business Accounting Software is Simple Bookkeeping Spreadsheets
Accounting software is used by accountants to enter many complex financial transactions into the financial books of account and is almost invariably based upon double entry bookkeeping principles. A major advantage to those companies and the finance staff is the extent to which financial information contained in the database can be queried for financial control purposes.
An accountant needs to not only ensure the financial records are accurate but also retrieve any part of the accounting records to answer accounting questions on the accounts, provide a legal basis for the transactions and report the financial statements at regular periodic intervals.
The small business has different accounting needs which are better described as bookkeeping than accounting. For non limited companies that do not need to produce a balance sheet then a simple income and expenditure account can be produced much simpler using single entry bookkeeping principles.
Less financial control is often required from small business accounting software as the bookkeeper is often the owner manager who already has an intimate knowledge of each transaction. Books are still required for tax purposes and a solid requirement of preparing a set of financial books for tax purposes is that each entry is supported by third party evidence.
Examples of third party evidence would be sales invoices, purchases invoices and bank statements. Financial transactions where no receipt exists can still be entered in the business books although all transactions not carrying third party evidence could subsequently be disallowed for tax purposes and certainly would be if the amounts entered indicated unusual income or expenditure.
Producing an income and expenditure statement using single entry bookkeeping is little more than making two lists of financial transactions. Those lists being one of sales income received from sales invoices or receipts issued to customers and the other of purchase expenditure being from purchase invoices received from suppliers.
To record sales income it would not normally be sufficient to simply add up the total of the invoices as such a summation does not leave an audit trail of the items which have been included. A written list of sales invoices does provide an audit trail.
Sales accounting for a small business accounting purposes can be either a manual list of the sales invoices or by using a spreadsheet package a list can be made on a bookkeeping spreadsheet. Using a spreadsheet for the bookkeeping has advantages as simple formula can be used to add up the column totals.
The essential information to enter for a sales invoice would be the date of the sale, name of the customer, sales invoice number if applicable and optional a brief description of the item sold. In the next column would be the total sales invoice amount. If items like value added tax are required to be accounted for then an additional column would be required to accommodate the vat or sales tax accounting.
A further small complication might be if at the discretion of the small business owner additional information was required from the bookkeeping records to indicate the totals of the different types of products and services then additional columns could be incorporated to enter the net sales figures in these columns.
There it is then, a simple list of sales invoices to satisfy the sales accounting requirements for a small business where a balance sheet is not required.
On the expenditure side of the business the bookkeeping can also be a simple list of the purchase invoices and receipts showing the amount spent. The list should also produce an audit trail by showing the date of the purchase invoice, name of the supplier, purchase invoice for identification purposes and the total amount spent.
Usually tax returns are the main purpose of producing small business accounts and invariably some analysis is required to show what the expenses have been spent on. That is not difficult to achieve and as with the sales accounting the owner manager can add additional standard columns to the bookkeeping spreadsheet.
The expenditure analysis columns do not need to be a different column for each type of expenditure. It is better to set up and group the analysis columns in general headings which can accommodate all the expenses.
Such columns may include stock, other direct costs, premises costs, general administrative costs, transport and delivery costs, repairs and maintenance, travelling and hotel costs, motor costs, bank and legal costs and other expenses. It is better not to enter too many items under a general heading of other expenses as this is more likely to be investigated as the type of expense has not been precisely identified.
One important column to also include is for asset purchases as fixed assets usually have different tax rules applying to the claim of the expense against tax and should be separated from other expenditure.
Having set up two bookkeeping spreadsheets the task is then to produce the income and expenditure account by collecting the totals of each of the analysis columns. The sales total is the sales turnover from which is deducted the totals of each of the expenditure classification totals with the result being the net profit and loss of the business.
Where stock is bought and sold a further adjustment may be required to account for the difference between opening and closing stock. This is done by taking a physical stock check and valuing the stock at the start and end of the financial period.
On the income and expenditure account adjust the stock purchases figure by adding the value of the opening stock and deducting the value of the closing stock. The result is not the stock purchases total as shown in the bookkeeping spreadsheets but the cost of the goods which have been sold to produce the sales turnover being reported.
Simple bookkeeping for a small business accounting purposes can be two lists of sales and purchases supported with sales invoices and purchases invoices.
Source:
Buzzle.com
An accountant needs to not only ensure the financial records are accurate but also retrieve any part of the accounting records to answer accounting questions on the accounts, provide a legal basis for the transactions and report the financial statements at regular periodic intervals.
The small business has different accounting needs which are better described as bookkeeping than accounting. For non limited companies that do not need to produce a balance sheet then a simple income and expenditure account can be produced much simpler using single entry bookkeeping principles.
Less financial control is often required from small business accounting software as the bookkeeper is often the owner manager who already has an intimate knowledge of each transaction. Books are still required for tax purposes and a solid requirement of preparing a set of financial books for tax purposes is that each entry is supported by third party evidence.
Examples of third party evidence would be sales invoices, purchases invoices and bank statements. Financial transactions where no receipt exists can still be entered in the business books although all transactions not carrying third party evidence could subsequently be disallowed for tax purposes and certainly would be if the amounts entered indicated unusual income or expenditure.
Producing an income and expenditure statement using single entry bookkeeping is little more than making two lists of financial transactions. Those lists being one of sales income received from sales invoices or receipts issued to customers and the other of purchase expenditure being from purchase invoices received from suppliers.
To record sales income it would not normally be sufficient to simply add up the total of the invoices as such a summation does not leave an audit trail of the items which have been included. A written list of sales invoices does provide an audit trail.
Sales accounting for a small business accounting purposes can be either a manual list of the sales invoices or by using a spreadsheet package a list can be made on a bookkeeping spreadsheet. Using a spreadsheet for the bookkeeping has advantages as simple formula can be used to add up the column totals.
The essential information to enter for a sales invoice would be the date of the sale, name of the customer, sales invoice number if applicable and optional a brief description of the item sold. In the next column would be the total sales invoice amount. If items like value added tax are required to be accounted for then an additional column would be required to accommodate the vat or sales tax accounting.
A further small complication might be if at the discretion of the small business owner additional information was required from the bookkeeping records to indicate the totals of the different types of products and services then additional columns could be incorporated to enter the net sales figures in these columns.
There it is then, a simple list of sales invoices to satisfy the sales accounting requirements for a small business where a balance sheet is not required.
On the expenditure side of the business the bookkeeping can also be a simple list of the purchase invoices and receipts showing the amount spent. The list should also produce an audit trail by showing the date of the purchase invoice, name of the supplier, purchase invoice for identification purposes and the total amount spent.
Usually tax returns are the main purpose of producing small business accounts and invariably some analysis is required to show what the expenses have been spent on. That is not difficult to achieve and as with the sales accounting the owner manager can add additional standard columns to the bookkeeping spreadsheet.
The expenditure analysis columns do not need to be a different column for each type of expenditure. It is better to set up and group the analysis columns in general headings which can accommodate all the expenses.
Such columns may include stock, other direct costs, premises costs, general administrative costs, transport and delivery costs, repairs and maintenance, travelling and hotel costs, motor costs, bank and legal costs and other expenses. It is better not to enter too many items under a general heading of other expenses as this is more likely to be investigated as the type of expense has not been precisely identified.
One important column to also include is for asset purchases as fixed assets usually have different tax rules applying to the claim of the expense against tax and should be separated from other expenditure.
Having set up two bookkeeping spreadsheets the task is then to produce the income and expenditure account by collecting the totals of each of the analysis columns. The sales total is the sales turnover from which is deducted the totals of each of the expenditure classification totals with the result being the net profit and loss of the business.
Where stock is bought and sold a further adjustment may be required to account for the difference between opening and closing stock. This is done by taking a physical stock check and valuing the stock at the start and end of the financial period.
On the income and expenditure account adjust the stock purchases figure by adding the value of the opening stock and deducting the value of the closing stock. The result is not the stock purchases total as shown in the bookkeeping spreadsheets but the cost of the goods which have been sold to produce the sales turnover being reported.
Simple bookkeeping for a small business accounting purposes can be two lists of sales and purchases supported with sales invoices and purchases invoices.
Source:
Buzzle.com
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