The Two Objectives of Bookkeeping

Your small business accounting should be prepared with two objectives in mind.

Tax Compliance

Accounting recordkeeping should follow the tax code in regards to what is business revenue and expense, and how expenses should be classified.

Managerial Insight

Accounting information, if structured properly, should also give a business owner insight into the health of their business. This insight starts with the creation of a well, thought out chart of accounts structure. The use of other attributes such as classes, locations, types and various other classification fields can further improve the use of your accounting data.

When designing the accounting system, keep in mind that your accounting numbers are not simply for year-end tax preparation. Your accounting numbers can be used during the year to provide you key indicators as to the health of your business, and whether key objectives and targets are being met.

 

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Comments 3

  1. Timmy

    This is the first comment on the post. As you can see, I, Timmy, took my time to type out a very long and well thought out response. While you may think that what I am saying amounts to nothing more than taking up space in a comment block, I can assure you it is much more significant than that.

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