Bookkeeping is the activity of keeping records of income and expenditure of money within the business. We generally distinguish between general bookkeeping and financial bookkeeping.

General bookkeeping is concerned with the day-to-day activities of your business such as purchasing and selling products or services. Financial bookkeeping goes beyond the reporting of your daily transactions. It is about planning your business activities and forecasting and executing your company’s investments. There are various bookkeeping requirements depending on your country’s legal status and regulations. As a small formal business, it may be as simple as recording your transactions (sales and purchases) in a book and keeping the records for a few years. As your business grows, it may involve filing tax returns, making formal payroll payments with tax implications (if you have employees), preparing annual financial statements, etc. Depending on the size of your business, you may be required by law to have your finances audited and reviewed by an external auditor. Please be assured that this is not meant to penalize you