What is Accounting?
I’m you’ve been told you must get the accounting right for your business. And that is correct. But what does “accounting” cover? In summary, accounting is the process of ensuring that the transactions carried out in the activities of your business are recorded correctly.
The very basic fundamentals of accounting that you will hear mentioned a lot is called “double-entry book-keeping”. Hence, one of the categories of professionals you can ask to help you manage your accounting is a “book-keeper”.
The phrase double-entry comes from the fact accounting is recorded in terms of Debits and Credits. Debits and credits must always balance. I.e. All the debits must add-up to the same as all the credits.
To know more about the fundamental laws of accounting, you may like to take our business fundamentals course
Should I use an Accountant?
As noted above you can seek out a Book-Keeper to manage your accounts, or you can hire an Accountant too.
If you have a small business, you can manage the accounts simply by keeping all the receipts and invoices and passing them to the book-keeper or accountant.
Should I use accounting software?
Believe it or not, I have known businesses with annual revenue (sales) in excess of £10mn to maintain their accounting using Excel. However, that is quite unusual, even for much smaller businesses.
If you considering accounting software – check out this article: How to choose accounting software
I think it’s worth saying – accountants train for a several years to obtain their qualifications. If you are fortunate enough to be growing a business with regular income and profits, you may like to consider seeking out an accountant or experienced book-keeper in order to make sure your accounting records are maintained correctly.