Accounting and bookkeeping services is use both as an overarching concept and to describe the actual act of accounting. To book is to handle financial (business) events in a company, ie to arrange, compile, evaluate and report business events. In practice, this means that you as an entrepreneur save receipts, invoices and other documents in order to be able to register and report them in chronological and systematic (account-base) order. Below we outline important accounting concepts and concepts; the cash method compare with the invoice method, as well as what is meant by basic accounting and general accounting.
1. Accounting is a modern invention
False. The first evidence of double-entry Small Business Bookkeeping Services comes from Italy in the 15th century, where an Italian mathematician, a friend of Leonardo da Vinci, describe how traders register business hands in various journals. Traders recorded their income and liabilities in two separate columns – which in our time have come to be call debit and credit accounts. This became the first book on double-entry bookkeeping services. Accounting was first introduce in Australia in the 17th century, but since more than 400 years have now pass, we can agree that accounting in itself is nothing new.
2. Accounting and bookkeeping are the same thing
The terms accounting and bookkeeping are often use synonymously even though they are not really the same thing. At least not completely. Accounting is regulate by the Accounting Act and means that a company, a foundation or an organization registers its business events in registration order or in systematic order. bookkeeping is part of the accounts, and forms the basis for the reports that are to be include in the accounts. bookkeeping is thus a broader concept. It is also the basis on which the declaration and the annual report are base when it is time to report to the Australia Tax Agency.
Accounting may only be handle by accounting consultants
That accounting should only be done by accounting consultants is a myth. You can take care of bookkeeping yourself, leave it to a friend or hire someone to take care of it. However, there are certain rules regarding the annual report which, for example, mean that limit companies and larger companies must use an auditor. Then you may need a certified public accountant .
4. The person who books must be good at mathematics
Despite the fact that accounting consultants deal with various accounts a lot and often the claim that accounting consultants would be math geniuses is not necessarily true. An accounting consultant can go a long way without being particularly good at math and so can someone who takes care of their own accounting. Today, almost all accounting is digitized. The accounting and accounting programs do the calculations for you and can make comparisons or even warn if it thinks something has gone wrong.
5. Accounting principles are harmonized across national borders
There are 3 distinctive accounting standards use worldwide. These are US GAAP (generally accept accounting principles), IFRS (international financial reporting standards) and Australia accounting standard – FAR. In Australia , FAR is mainly applies, but list companies are also require to comply with IFRS accounting principles. These can differ quite a lot, which is important to keep in mind when booking. The Australia accounting standard is more principle-base in comparison with, above all, US GAAP, which is more rule-base.
If you make a mistake in the accounting, it’s done
No, just take it easy. There will certainly be an error or two when you post. For example, you could post a voucher to the wrong account or accidentally enter the wrong amount. The most important thing then is that you are clear about what the error is, and correct it as soon as you can. In manual accounting, you delete a line over the error and write the correct information there, follow by the date and signature. An explanation is also given as to why a correction has been made. In e-accounting, on the other hand, the correction depends on which accounting system you use, but the practice is to have a function for changing incorrect verifications.
7. Small businesses avoid accounting
Unfortunately, this is not true. According to the Australia Tax Agency, all natural persons who conduct sole proprietorships are require to keep accounts. This also applies to those who run limit companies, trading companies and economic associations. That smaller companies would not have to book is therefore a myth.
8. “Cost as cost” – Which account you post on does not matter
Posting costs to the first best cost account is a common mistake business owners make when posting. This mainly applies to start-up companies that book for the first time and have not yet had to spend time correcting incorrect bookkeeping services. Usually you become a little more careful the second time, when you realize that it can take some time to correct.
By following the BAS chart of accounts, you can see where all assets are to be book. However, it is important to remember that just because something is post to an account at the time of purchase does not mean that the running costs in connection with the purchase are post to the same account.
9. Accounting is expensive
Many expect that bookkeeping services will cost the shirt. bookkeeping services can be as expensive as any other service, especially if the assignments are large and the verifications are endless. But for entrepreneurs who have a “normal” number of vouchers a month, bookkeeping can actually be cheap compare to what it costs when you sit there and struggle with the numbers. A good way to find out if you are making money from outsourcing bookkeeping is to watch yourself every time you do something bookkeeping relate to see how many hours you spend. Then compare this with what you can earn if you had spent this time on income-generating data. Many people think that you should take care of the accounting yourself to avoid an extra expense, when you can instead get a relatively larger income by using the time for income-generating tasks.
10. Creative accounting is illegal
Here the border is fine. Creative accounting means that you stretch the accounting rules so that the company can benefit financially. This can be done by, for example, reporting a smaller income, and thus having to pay less tax. The term has taken on a negative connotation because it often leads to companies crossing the border and committing fraud. A tip is therefore to stay away from creative accounting. Creativity is an asset in many cases, but not when it comes to accounting.