13 Most Important Accounting Books You Should Keep For Your Business

The following are the 13 Most Important Accounting Books You Should Keep For Your Small Business:

  • Cheques Journal
  • Cash Receipts Book
  • Sales Day Book
  • Purchases Day Book
  • Creditors Book
  • Sales Invoices
  • Purchases Invoices
  • Payroll
  • Bank Statements
  • Stocks Records
  • Cash flow
  • Director’s Account

No matter the size or nature of your business  you need to keep accounting books of your business.

Keeping accounting books will enable you to track the financial transactions of your business.

The following are just a few of the basic accounting books you need to keep for your business.

Cheques Journal

You should keep a journal showing all payments made through your bank account.

If you have several accounts, you should keep separate journal for each account.

This book is important because should there be any misunderstanding between you and any of your customers or suppliers, you can easily refer to this journal to find the details you need to resolve the issue.

Cash  Book

The cash book is the most important accounting book you should keep for your business. The cash book is very important because it is the book where you record even the very first expenses of your business; [also known as preliminary expenses].

In addition, all incomes and expenses of your business should be recorded in the cash book.

The cash book is so important that suppose, there is a fire outbreak that destroyed all your business records.

And that it was only the cash book that was salvaged from the wreckage.

It should be possible for an accountant to reconstruct all other subsidiary accounts from the cash book.

Most importantly, the cash book is called a book of primary entry because all other accounting books take their root from the cash book.

Sales Day Book 

Sales Day Book is where you record all your daily sales. All daily sales must be recorded in this book, whether you paid for them immediately or promised to pay later.

Therefore, it should contain the following details, among others:

  • Names of the customers
  • Invoice numbers,
  • Dates
  • Amounts
  • Description of goods or services

At the end of the day the balance in this book should be transferred to the appropriate ledgers.

From there, they will find their way to the Trading, Profit and Loss Accounts.

Purchases Day Book

Purchases day book is  important because that is where you will record your daily purchases.

This book is important because all purchases, whether you paid cash for them or not, should be written in this book.

Therefore,  it should show the following details:

  • Names of the customers
  • Invoice numbers,
  • Dates
  • Amounts
  • Description of goods or service

At the end of the period, the totals should be transferred to other appropriate ledgers for further processing.

Accounting Book: Debtors Book

Debtors Book is an important accounting book you should keep for your business.

Moreover, it should contain all the names and accounts of those who are owing your business.

Furthermore, debtors book makes it easy for you to know at any given time how much of your business money is with people.

Therefore, debtors book should be correctly updated after every transaction.

Creditors Book

Creditors Book is another important accounting book you should keep for your business.

This book is very important because it is where all the debts your business owes are recorded.

For example, Creditors Book should show, among others the followings:

  • Names and particulars of all your creditors.
  • Suppliers
  • bank overdrafts
  • Accrued business expenses, such as rents, wages and so on.
  • Dividends not yet paid
  • Taxes not yet paid, and
  • Lots of more.

If it is accurately kept, it should be easy for you to know how much debts your business owes.

Therefore, creditors book should be accurately updated after every single transaction.

Payroll 

This book is where you should record the salaries and wages you pay to your employees.

Furthermore, it should contain details of the pay as you earn (PAYE) deducted from your employees.

From this book it should be easy for you to calculate PAYE deducted from your employees.

At the end of the month, you should remit to relevant tax authority, within 7 days, the taxes deducted from your employees.

In many cases you may be sanctioned for failing to comply with the regulations of tax authorities.

Sales Invoices

It is very important that you  keep copies of all your sales invoices in a safe place.

This is because, you might have reasons to refer to them in future.

Furthermore, the tax authorities might also have reasons to look at your sales invoices when preparing your tax returns.

Most importantly, for instance, if there is a disagreement in figures between you and a customer, you can easily fall back on the sales invoices to get the info you need to help you sort out the problem.

Purchase Invoices

You also need to keep copies of all your purchase invoices. Purchase invoices are important because, your sales personnel might want to refer to them to check the cost prices of some  items, in case they forget.

After doing everything you want to do with the purchases invoices, you should file them away in a safe place.

Stock Records

Stock Records is yet another important accounting book you should keep for your business.

You need to keep accurate records of your stocks because stocks might take a large chunk of your capital.

The stock records could be kept manually or on a computer software.

In any case, your bookkeeper or accountant should be able advice you on which method will be better for your business.

The stock Records should show:

  • all the items you have in the shop.
  • the balance of each item of stock.

Furthermore, the stock records should be updated after every transaction.

The best part is that from the stock records, you can easily identify fast selling products as well as the slow selling ones.

Bank Statements

At the end of every month, you should obtain bank statements in respect of each of your bank accounts. The bank statements will enable you to:

  • compare the balance in your bank accounts with the balance in the cash book
  • prepare bank reconciliation statement
  • track your transactions with your bank

Most importantly, you can even enable you to prevent or detect fraud on the part of your employee.

Cash Flow

Cash flow should help you to track your business incomes and expenses.

Cash flow statements should enable you to::

  • know your cash inflows
  • know your cash outflows
  • know your expenses so that you will plan how to control them.

Cash budget and cash flow are two effective tools you can always use to manage your small business finances.

Related:10 Greatest Benefits Of Preparing Annual Financial Statements For Your Small Business

Accounting books: Director’s Current Account

You need to create Director’s current account for the following reasons:

  • It should record all financial transactions between you and your business.
  • it should show how much you are owing your company.
  • it should also show how much your business is owing you
  • it should record additional capital introduced into the business
  • it should also record any payments or refunds you make to the company.

.Your accounting and records keeping system, whether on paper or on  computer, should be:

  • Simple
  • Easy to understand,
  • Reliable,
  • Accurate,
  • Consistent and
  • Designed to provide information on a timely basis.

If you cannot do it yourself, you should hire a bookkeeper or an accountant to keep records for you on part-time basis.

The best part is that stats from the accounting books will enable you to make better decisions for your business.

Furthermore, when it is time to prepare the final accounts of your business,  you will pay less audit and accounting fees.

Most importantly, keeping accounting records will enable auditors to finish their work quickly so they can file your tax papers.

In conclusion, I know that not everybody is endowed with the love for figures.

However, you should not be lazy or disregard the need to keep accurate accounting books for your business

 

By Samuel Ijenhi

info@samuelijenhi.com.ng

 

 

 

 

 

 

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