All the financial transactions in a business have to be recorded, and when this is done, it is called bookkeeping. As renowned bookkeepers Darcy Services say “It is a bookkeeping services Perth’s job to organize, classify and maintain all the financial transactions that take place in a business”. Simple transactions can be recorded by the single-entry accounting system, but if it is more complex, then bookkeeping would have to be done in the double-entry accounting process. All the bookkeeping transactions are made in a way that there is always some supporting documentation with the bookkeeping system. This document might be a purchase order, a receipt, invoice, etc.
Understanding how bookkeeping works can help you keep your business running smoothly, stay compliant with tax regulations, and make informed financial decisions.
🧾 What Is Bookkeeping?
Bookkeeping involves tracking and recording every financial activity—sales, purchases, receipts, and payments. These records are typically backed by supporting documents such as:
-
Invoices
-
Receipts
-
Purchase orders
-
Bank statements
There are two main systems used in bookkeeping:
-
Single-entry system: Ideal for small or simple businesses with minimal transactions.
-
Double-entry system: Commonly used for more complex businesses. Every entry affects two accounts—debit and credit—to keep the books balanced.
🛠 How Is Bookkeeping Done?
There are several ways to record bookkeeping data:
-
Manual journals: Traditional hand-written records.
-
Spreadsheets: Using tools like Microsoft Excel.
-
Bookkeeping software: Programs like QuickBooks, Xero, or MYOB simplify and automate the process.
Professional bookkeepers understand how to:
-
Use debit and credit entries
-
Follow the company’s chart of accounts
-
Maintain financial records accurately
⚙️ Setting Up a Bookkeeping System for Your Business
To set up bookkeeping for your business, you need to choose the right accounting method:
🔹 Cash Accounting
-
Records transactions only when money changes hands.
-
Best for small or solo businesses.
🔹 Accrual Accounting
-
Records transactions when they occur, even if payment is delayed.
-
Ideal for businesses offering credit or with more complex operations.
➡️ Many small businesses start with cash accounting and switch to accrual accounting as they grow.
📊 Why Bookkeeping Matters for Every Business
Proper bookkeeping ensures:
-
Accurate financial reports
-
Better decision-making
-
Smooth tax filing
-
Business growth tracking
As your business expands, so do your financial responsibilities. You might start with a single-entry system, but switching to a double-entry system is often necessary for scalability.
Also, understanding the core financial terms like:
-
Assets
-
Liabilities
-
Revenue
-
Expenses
-
Equity
…will help you make sense of your financial statements and maintain balanced books.
✅ Final Thoughts
Bookkeeping may seem basic, but it’s the backbone of a healthy business. Whether you’re using a simple spreadsheet or advanced software, the key is consistency and accuracy.
If you’re unsure where to start, consider hiring professional bookkeeping services in Perth like Darcy Services to help set up or manage your system.
Accounting is very important for all businesses, and once companies get bigger, then they need more care. You can use a single entry system, but as the business gets bigger and the accounts get more complex, it can become important to have a double-entry bookkeeping system. It is important that people understand equity, assets, expenses, revenues, and liabilities as it can help to balance the books. In bookkeeping you would have to balance the books at the end of the year. Cash accounting is done more often from time to time whenever the money changes hands, and even if the cash does not change hands, it is still recorded.
