When starting a business, there are many things that every entrepreneur should be aware of and prepared for, such as managing for accountability to customers, suppliers, employees, business partners, banks and tax authorities. Among these and many other responsibilities, we find the accounting records, which must be updated regularly with the support of a professional accounting service, so that they are easily accessible and understood in the event of a tax audit.
To better understand the world of business accounting and the importance it has for your company, we invite you to continue reading this article to discover what accounting records are, their details and the importance of keeping them updated.
What are accounting records?
The accounting records are all the annotations focused on the review and control of the transactions of a company, which allows the timely recognition of the current financial position. The importance of this type of records is such that they are required for tax purposes, compliance with legal responsibilities and for the development of financial supervision. For this reason, it is advisable that your company’s bookkeeping be carried out by a professional and reliable accounting service provider in Colombia, since the correct performance of this type of activity contributes to the growth and stability of your company.
Now, another point to highlight from the accounting records is that these are the reflection, journal entries and accounting books that describe the accounting transactions of a company, thus supporting the production of financial statements. This is why they must be kept for several years, so that external entities can inspect them and verify that the financial statements derived from them are correct.
- Any transaction initiates an accounting procedure: From any purchase or sale you make. The idea is to make a record of each financial transaction. For this process it is advisable to have the support of an accounting service provider.
- These transactions are recorded in the journals: This is the starting point of bookkeeping, each accounting procedure must be recorded in a journal, which is the record of each financial transaction as it occurs.
You can have separate journals for sales and cash receipts and others for disbursements, or just one that includes all types of transactions. Either approach is fine, but the most important thing to remember is to record each entry and keep the journals updated. This process can be facilitated with the support of accounting service provider in Colombia.
- Group all the entries using the general ledger: This is where the accounting service providers in Bogotá are in charge of transferring or publishing each of the journal entries in their appropriate place in the general ledger by type of transaction. This streamlines the search for individual transactions and also provides a base at some point, often at the end of the month or quarter.
- Prepare the trial balance: This is where all your debit entries will be summarized, which must match; if not, they should refer to the transaction logs in their journal and work to see where the error occurred.
- Prepare the financial statements: At this point the hard work pays off, as this is the document that lenders, government agencies or any entity will require to know who you are financially before doing business with you.
This is the shortest summary of the accounting process, from its beginnings in transactions to the production of the financial statements. But now do you know where it’s going and why? Let’s see it.
How are the accounting records presented?
The accounting records can be presented in different ways, either on paper or in digital format. In most cases, companies choose to hire an accounting service provider in Bogotá, especially for the peace of mind that good management of your financial information can provide in the development of the company.
If you want advice or assistance to prepare accounting records, contact our accounting service in Bogotá. We have a team of trained specialists; we also have the perspective and experience necessary to carry out the accounting of your company effectively.