What You Need to Bookkeep at Home

In an era of technological advancement and an ever-growing economy, people need to keep track of their finances. To establish how money is used, there is a need to keep daily records of financial transactions or inventories. Bookkeeping offers the best solution for tracking how you use your money through formal systems. It is essential to understand what bookkeeping is before knowing how it is done.

What is Bookkeeping?

Bookkeeping is a formal way of tracking your money using systems that can be traced. It provides the best way of knowing how your money is being used and the period it is used. There are various methods of bookkeeping, such as single and double entries. The two methods are the most commonly used in multiple businesses or organizations.

Although many people easily understand the single-entry method, their accuracy levels differ from that of double-entry. To undertake bookkeeping, a person should understand the expenses and revenues involved. The payments must be recorded against revenues realized and transferred into a ledger for accounting purposes. Bookkeeping is the step that precedes accounting procedures.

What You Need to Bookkeep at Home

Bookkeeping at home involves keeping records of revenues and expenses for various businesses. The bookkeeper can keep the records from home, provided they have the necessary information. Additionally, bookkeepers may be charged with paying bills and collecting payment invoices. The following are other tasks performed by a bookkeeper.

•        Analyzing financial records

•        Developing financial reports

•        Creating updated records

•        Feeding in the financial data in the computer or ledgers

•        Monitoring debit and credit accounts

A bookkeeper should generally monitor all the finances going in and out daily. Bookkeeping at home involves freelancing the organizations that require bookkeeping services. Because bookkeepers operating from home offer their services virtually, they can freelance to sites where bookkeeping services are needed and get paid for the work done. Bookkeepers from home should set their rates even when they work with multiple clients.

Usually, bookkeeping jobs are posted on various platforms, with some organizations rooting for long-term or short-term services. It is essential to pick a niche that your bookkeeping services can identify with. For instance, you may become a bookkeeper for lawyers or magistrates. It is easy to market your services when you pick a specific niche at the initial stages of a bookkeeping job.

After identifying a specific niche as a home bookkeeper, create a website that advertises the freelance bookkeeping services. Organizations or persons looking for bookkeepers can quickly locate and contract your services through the websites. With time, your client base may grow, calling for a venture into other niches.

Steps of Bookkeeping at Home

1.      Creating a system

The primary step of becoming a successful bookkeeper is identifying the system to use. Because consistency is required in bookkeeping, one can use ledgers to record all the financial information to avoid losing vital information. The system can be as simple as a box full of all the notes and receipts, or sometimes the data is fed into accounting software.

Accounting software also offers reliable sources of data. You can invest in software like Quickbooks and Freshbooks that provide clear data presentation. The listed programs are freely available, thus making beekeeping tasks easier and enjoyable.

People who prefer using a manual system can design a spreadsheet that keeps the data of all the transactions, including the debits and credits. The spreadsheet should capture the essential information, including the names of buyers and suppliers. Besides, account details, dates, and amounts transacted should be recorded in the spreadsheet.

2.      Proper Recording of the Transactions Made

To minimize confusion, always using the same accounting method is essential. Avoid mixing of the data-keeping techniques to increase accuracy levels. Sometimes, a bookkeeper may decide to use two accounting methods. In such a scenario, the bookkeeper should compare the data to establish if they match. The cash method is commonly used when dealing with a small business. However, the accrual method should be employed when the company has grown.

3.      Posting Transactions to Ledger

For easy tracking of the transactions, it is significant to separate them into various accounts. A bookkeeper will understand where the money came from or where it goes when the accounts are separated. The accounts may contain a clear picture of the inventories or specific sales. The accounts should include the cash receivable, payroll, daily inventories, revenues realized, and expenses.

Thus, bookkeeping is a task that can be undertaken both remotely and physically. Once a bookkeeper has identified the systems and methods of accounting, they should identify their niche. They can expand their client base by advertising their services on created websites.

Written by Taylor McKnight, Author for Sandoval Tax