Your questions about bookkeeping and accountants answered
- Which types of bookkeeping are there?
- What does single-entry bookkeeping involve?
- Who is required to use double-entry bookkeeping?
- Why you need a good accountant?
Accurate bookkeeping is a legal requirement. Accurate bookkeeping also prevents errors with respect to other obligations, such as your VAT return. That’s not the only reason though. As an entrepreneur, you also want to stay informed about the financial health of your business.
Even if this is a task that many entrepreneurs dislike, you should certainly not neglect your bookkeeping.
Wich type of bookkeeping?
When you start your own business, you should think about what kind of bookkeeping you are going to use. There are, in fact, two types:
- single-entry or simplified bookkeeping
- double-entry bookkeeping
Which one you choose depends on your company form and annual turnover.
Not everyone can opt for single-entry or simplified bookkeeping. It’s only allowed for sole proprietorships, partnerships (SNC), and ordinary limited partnerships with an annual turnover of less than €500,000.
Note: Some sectors are not allowed to use single-entry bookkeeping, such as insurances, lending transactions, investments, and stock market transactions.
Components of single-entry bookkeeping
Single-entry bookkeeping consists of the following components:
- Purchase ledger: contains entries of all incoming invoices and credit notes from suppliers.
- Sales ledger: contains entries of all outgoing invoices and credit notes from customers.
- Financial journal: consists of a cash and a bank ledger. The cash ledger records all cash income and expenditure. The bank ledger records all income and expenditure made to or from bank accounts.
- Inventory ledger: includes a description and valuation of stocks.
Each year, you have to prepare internal financial statements though you are not obliged to make them public.
If your annual turnover exceeds €500,000 or if you have a public limited company (SA), a private limited company (SRL), or a cooperative company (SC), you are obliged to use a double-entry bookkeeping system.
The difference between single and double-entry bookkeeping
Just as with single-entry bookkeeping, you record all incoming and outgoing transactions. The difference is that, in double-entry bookkeeping, every transaction receives a counter-entry. This means that there is a corresponding receipt or payment. That's why we call it double-entry bookkeeping.
Components of double-entry bookkeeping
Double-entry bookkeeping consists of the following components:
- A journal: records all transactions.
- The chart of accounts: a structured chart of all accounts. You are obliged to follow an established chart of accounts.
- You must draw up an annual inventory, taking into account the format of the chart of accounts.
Every year, you must prepare online financial statements. You must file these annually with the national bank. A copy thereof is published in the Belgian Official Gazette.
Why involve an accountant?
You can always do your own bookkeeping, but it's still advisable to call on the services of an accountant. Because, as an entrepreneur, you are responsible for the success of your business, but the world around you changes at lightning speed and you want to be able to focus on your business. Therefore, you are better off calling on experienced specialists with expert knowledge.
A bookkeeper or accountant, as we often call them these days, does so much more than simply record your invoices, and keep your accounts in order. He or she is a person of trust who manages and interprets your personal and financial data, understands your financial situation, and proactively provides you with advice. You set the course, but a good accountant makes sure you stay on it.
3 characteristics of good accountant
Choosing an accountant or accounting firm is not difficult at all. Provided you take the following characteristics into account:
- A good accountant has the necessary expertise.
- A good accountant is easy to reach.
- A good accountant enjoys your complete trust.
Is that relationship of trust missing? Then you may hesitate to discuss certain problems and they won't get solved. Therefore, only entrust your financial and personal situation to someone you really trust. And build a close professional relationship in which everything is open for discussion.
So, in your search for an accountant, be sure to drop by and get acquainted!