Accounting and bookkeeping are almost invariably used alongside each other. The reason being that one depends on the other, they simply have to co-exist and either needs to be done properly in order to add value to the organization. In this article we will focus on proper bookkeeping.
WHAT BOOKKEEPING IS
Bookkeeping is the systematic and accurate recording of all financial transactions which occur within any professional organisation. This includes your everyday bank transactions(payments,receipts and charges), invoices to clients/customers and from suppliers among others. A sound bookkeeping system is therefore essential to the health of any business.
THE VALUE OF PROPER BOOKKEEPING
All the recorded financial transactions then need to be interpreted by using accounting reports in order to make sense of the information, if they were not recorded properly, it goes without saying that the resulting reports are virtually useless for decision making due to their lack of integrity. It goes back to the fundamental technology law of garbage-in, garbage-out.
Other benefits which accrue from proper bookkeeping include easily passing of tax audits and remaining compliant to relevant laws, meaning you save thousands of rands in payments to SARS. Improper or terrible bookkeeping can cost your business millions of rands every year. A proper bookkeeping system is one of the simplest ways you can help your business succeed.
BOOKKEEPING BEST PRACTICE
Firstly, it must be said that if you run a business, every piece of paper no matter how small and seemingly insignificant it seems needs to be kept and recorded in your accounting system(either manual or cloud). These are all the receipts you get when you fill up your car, buy clients lunch or purchasing any office supplies.
The other important bookkeeping best practice is to insist on invoices/tax invoices from all your suppliers. This is different to when you pay and are issued with receipts at retail stores. This is when you may want to buy inventory for the business and they send you a quotation or pro-forma invoice, before making payment please ensure that they issue you with an invoice or tax invoice that is acceptable by SARS, details can be viewed on the SARS website, or simply ask us and we will send you a template(checklist) of invoice requirements.
SUMMARY OF KEY NOTES
- A bookkeeping system which enhances reporting and prevents inaccuracies is crucial.
- Keep record of every single transaction and insist on official documentation.
- If not done properly, you could lose millions of rands every year unnecessarily.
- If you get stuck, we are always here to help.