Bookkeeping in Accounting: What is the Minimum I Need?

Reading Time: 3 minutes

Bookkeeping plays a critical role in accounting. Ensuring your financial records are accurate and organized helps your company make better financial decisions, assists with evaluating your business performance (and where to invest more resources), and helps with day to day cashflow management. Some components of bookkeeping are also required for regulation compliance, and are useful for generating reports required for transparency with stakeholders, regulators, investors, and lenders.

In short, bookkeeping is an important part of the accounting process.

At the bare minimum, you bookkeeping should:

Record All Transactions

You should absolutely record any money that has come in or gone out of your business, meaning sales, purchases, expenses, and, most importantly—RECEIPTS!

(If you are ever audited, you will need to provide receipts to prove your purchases. It’s also important for qualifying your deductions)

You need an accurate account of all of your business’ money flow throughout the year.

Accurately Classify and Categorize Transactions

Your transactions should be sorted into:

  • Accounts Receivable
  • Accounts Payable
  • Inventory
  • Cash on Hand
  • Etc.

This is critical for structuring your financial ecosystem and encourages better practices and accuracy.

Reconcile All Financial Reports, Statements, and Records

Whether it’s a credit card statement, bank statement, balance record, or other account, you need to go through your reports and ensure they match your cashflow. This means verifying balances and transactions and looking out for any errors (i.e. double charges on purchases, inconsistency in payouts) and unusual activity.

What’s Next?

Once you’ve picked up the habits and flow of minimum bookkeeping, it’s important to expand into the next steps. This includes:

Set up and Maintain a General Ledger

Your general ledger will create a record of all of your financial transactions, but in chronological order. It’s considered the central repository for your financial records, and gives you a great overview of account balances, transaction history, and monthly in and out.

Creating and Maintaining a Chart of Accounts

A chart of accounts is a list of all of the accounts in your bookkeeping system. This will include account numbers, names, types (i.e. accounts payable, accounts receivable), and be used to monitor all financial activity, not necessarily in chronological order.

Create Financial Reports and Statements Monthly, Quarterly, and Yearly

Typically, we recommend setting up a Profit and Loss Statement, Balance Sheet, and Cash Flow Statement as your three core reports. These give you a great overview of your business’ financial performance, and it’s good to get in the habit of generating reports in regular intervals.

Bringing it All Together

While there may be more your business needs (depending on the size, scale, and how much financial information involved), with these minimal components of bookkeeping implemented, you can begin the critical work of putting your financial data to work.

Here’s how:

Review and Analysis

While you should always review and analyze for accuracy, once you have accurate financial data you can begin identifying data and financial trends, discover any seasonality to your business, see high performing vs. low performing products and services, and begin to make shifts in your business to create more financial opportunity.

Establishing KPIs (Key Performance Indicators)

A Key Performance Indicator is often the financial ratios you can derive from your bookkeeping records. These are typically:

  • Gross Profit Margin
  • Net Profit Margin
  • Debt-to-Equity
  • ROI (Return on Investment)

Identifying which ratios you want to increase can help you determine how to shift your resources, and what shifts to make. You can also identify which products and services seem more stable and consider where costs can be reduced.

Bookkeeping Help and Support

Once you’ve reached this point in your bookkeeping system, you’ll probably realize how time consuming maintaining your books can be. This is the most common time when we begin to see errors, missing data, or reconciliations skipped. Most businesses will reach a point where accounting help is needed, whether for getting the bookkeeping system cleaned up, generating reports, or offering analysis and business recommendations.

Just know that you have options. Outsourced bookkeeping is a common service CPAs will provide, and you’ll often end up with a team of bookkeepers and Certified Public Accountants in your corner (which also makes tax time so much easier).

Contact us today if you’re looking for bookkeeping help!

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Turn around time was amazing on the project I needed done. When you don’t understand all the different forms communication is key and you will get that here. They are there to explain what and why you need it.
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I usually don't write reviews much as everyone has different experiences, but definitely wanted to share the positive experience I have had here and why I would recommend them to all my family, friends and co-workers.I got a referral for here from a friend, so thought of giving them a try over my old CPA firm. I have been going here for a couple years now and have to say they are top notch. They are always responsive and willing to work with me even when I am delayed. I generally like to ask a lot of questions and not once did I feel like they were annoyed by it and would very thoroughly and positively answer all my concerns with detail explanations. Even during the pandemic, they worked with me 100% virtual and it was seamless. Overall, I am very happy with this firm and will continue with them for the foreseeable future.
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Kevan Shah
21:45 01 Oct 21
I’ve been going to them for 3 years now for multiple of my businesses. I changed to them after I had problems with my previous CPA firm and I’m so glad I did! Best decision I ever made for my businesses. They have saved me thousands of dollars over the years as well as deal with my immensely complicated tax filling issues. No matter when I call, they always help answer all my questions (and trust me I have a lot) and put my mind at ease on all my concerns. I feel as if I am family the way they take care of me. The quality of their work has not changed; very consistent and professional. It is an understatement when I say I highly recommend them.
Maunil Shah
Maunil Shah
16:19 01 Oct 21
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Shah Hussain
Shah Hussain
03:58 01 Oct 21
Hello AKIF CPA,I wanted to share my experience with you, your team and whomever may be reading this message. My most humble thanks to you and your team for a being such great part of my success.You have done a fabulous job for us this year, and since you took over our books (during our most devastating times) you have literally taken weight off of our shoulders.Thanks for bringing everything up to date and also providing us with numbers or as you call it consultations, ahead of time so we could seal the holes.Great work!!!Shah H.
Sumit Dalwadi
Sumit Dalwadi
04:57 30 Sep 21
The professionals at Akif have been absolutely amazing! Quick to answer all the questions I had and always available to offer their guidance.
Calvin R
Calvin R
20:21 29 Sep 21
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Ammoria Daniels
02:11 16 Sep 21
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18:30 18 Aug 21
What an absolute pleasure to work with this CPA firm. My business is already seeing such a positive impact and growth. I cannot believe I didn't connect with them sooner. This firm is helping in so many ways! 5 stars is an understatement! Thank you so much for your help AKIF CPA
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Helptest ARCpoint Labs
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Saim and his team are the best CPAs in town. I have been their client for years. All started when I needed help with company structure with multiple companies and then accounting and Taxes. I have been very happy ever since. Thank you AKIF CPA.
Maria perez
Maria perez
18:31 08 Jun 21
Me and my husband have been getting all of our personal Taxes, business Taxes, monthly bookkeeping, accounting and payroll done with AKIF CPA. Recently, we had more stuff come up and had detailed analysis done on capital gains, single family rentals (SFR) and business disposition. You will only know how great this CPA company is until you have worked with them and given them a chance. Words can’t describe our experience. AKIF CPA gets the job done every time - very reliable, professional and affordable.
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Afnaan Amin
22:14 02 Jun 21
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Ryan Paton
Ryan Paton
10:56 08 May 21
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Tuan Vo
Tuan Vo
01:59 20 Apr 21
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