Bookkeeping skills refer to the ability of an individual to record, store, as well as retrieve the financial transactions of a company, with individuals or organizations, such as sales, receipts, purchases and payments.
Contemporary bookkeeping requires the use of certain computer softwares for the purpose of record keeping. Good bookkeeping skills, combined with the ability of being organized, play a great role in the accounting process of a firm which involves classification, reporting and analysis of a company’s financial data. Therefore, bookkeeping skills are indispensable to any big or small firm.
Why is bookkeeping important
Bookkeeping is important for the health and life of all sorts of businesses for the following reasons:
- Improves financial analysis as well as management. Bookkeeping is essential because it makes cash flow management easier. It guides your financial decisions and helps you determine whether or not your earnings are enough to cover your expenses.
- Helps in fulfilling tax obligations. Bookkeeping skills help you keep track of your expenses by recording all information in the form of documents. This makes accomplishment of annual taxes easier instead of failed attempts to recall the expenses occurred and rushing to find all the bills. Bookkeeping is also a requirement by law since it makes the audit process more convenient.
- Reporting progress and future planning are made more convenient. Bookkeeping helps in keeping track of the financial progress of a company as well as reporting any crucial information to investors. After ensuring that financially the business is one the right track, future business planning is much easier.
How to improve bookkeeping skills
Following tips will help you improve your bookkeeping skills:
- Do not procrastinate. If there is a change in your business finances on a daily basis, your bookkeeping systems should also be able to update these changes on a daily basis. Procrastinating may cause you to miss out something. Therefore, all transaction including sales, purchases and others should be recorded on a daily basis, especially if they are cash transactions.
- Be more technology savvy. Since the modern day bookkeeping is mostly done using computer softwares, it is important to familiarize oneself with useful functions of accounting softwares. For example, learn to properly use QuickBooks in order to save money, time, and efforts in the future.
- Be analytical and think about the future. In order to improve your bookkeeping skills you must be able to not only record but also analyze the financial reports and information. You should be able to think ahead and identify any risks and issues that the business might face in the future. For instance, you can try and pin point the area where the business/company can save money or the resources that it can use more efficiently.