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Individuals are not required by law to maintain financial records, but failing to do so can be costly from a financial and tax perspective. 

This is in contrast to businesses, which are required by law to do so. If your bank and credit card statements are erroneous, you might only realise it once it is too late to fix them. 

Your credit score could be damaged if you miss paying a bill. You might need to learn how to set aside money for investing and saving. 

Or you could overlook costs that would be tax deductible. Therefore, staying up to date on your finances makes sense.

What is an Account?

Accounts are nothing more than a summary of the business's dealings with people, their representatives, and things.

For instance, when a company transacts with suppliers or customers, the two parties each function as a separate account.

Similarly, businesses that buy tangible goods like machinery, land, buildings, etc., treat each tangible as a separate account. 

These accounts relate to actual events. Consequently, anytime a business engages in a transaction, 

It must first determine the accounts involved before applying the necessary accounting standards and golden accounting rules to record the transaction.

Furthermore, a T-Format is frequently used to represent an account. A T Account, therefore, has two sides. 

An account's right side is referred to as the credit side, while its left side is referred to as the debit side.

Types of Account

Three different types of accounts are real, personal, and nominal.

         1. Personal Account

         2. Real Account

                a). Tangible Real Account

                b). Intangible Real Account

          3. Nominal Account

Accounting is the process of documenting, categorising, and summarising financial transactions in a meaningful way and then evaluating the outcomes—both a science and an art of accounting.

It is crucial to have a proper accounting system in place for every type of entity, regardless of how big or small it is, in order to manage its business operations effectively. 

An accountant must thoroughly understand the terms and types of accounts that are used in accounting.

All the transactions connected to a specific head are presented systematically in an account. 

An account displays the condensed records of transactions connected to a concerned person or thing.

For example, every supplier and customer the entity deals with will have their own account when it has many different suppliers and customers.

Both tangible and intangible items may be a part of an account. Things include, among other things, real estate, structures, furniture, etc.

Statement form is how an account is expressed. Each side has two. Debit and credit sides are terms used to describe an account's left and right sides, respectively. The debit is identified as "Dr," and the credit is identified as "Cr."

What are Personal Accounts?

Personal accounts are ledger accounts used to keep track of transactions with individuals or other companies with whom your business has direct business relationships. 

Personal accounts include, among others, customers, suppliers, employee wage accounts, employee drawing accounts, owner capital accounts, etc.

The fundamental rule for personal accounts is to debit the beneficiary and credit the giver.

Example: Paying employees' salaries

The firm is the giver in this instance, while the recipient is a worker. As a result, the Employee's Salary account will be debited in the journal entry, while the Cash / Bank account will be credited.

Personal Accounting Benefits

Knowledge diversity: Working for a public accounting firm exposes you to a wide range of experiences with a wide range of clients. 

Public accountants will experience handling individual and corporate accounts and learn about a wide range of businesses.

Task diversity:  Because public accountants serve a wide range of clients, their daily responsibilities frequently change as a result of the various requirements that each client has.

Should I Hire a Professional or Do It Myself?

Although you don't need to have accounting experience or be "smart with numbers" to keep track of your income and expenses, it does take time and effort. 

Your preferred method will depend on your preferences. You have three options: either do it entirely yourself, pay an expert to help you occasionally, or combine the two.

Option 1: Use a professional

You can seek professional assistance if you lack the time or feel that your time is more valuable than what you would pay someone else. 

But exactly who? People frequently refer to anyone who prepares taxes, from bookkeepers to CPAs to tax advisers, when they discuss getting a personal accountant. Decide on the expert who best suits your needs:

  • Bookkeeper

Your finances may be handled by this person's concierge services, which might include paying your payments, checking your chequebook, and reviewing your credit card transactions. A bookkeeper may need more specialised expertise.

  • Accountant

This person has experience in bookkeeping and likely holds a college degree in accounting. 

The hourly cost is generally $35 per hour but can be significantly higher depending on the area, the job description, and experience level.

  • Certified Public Accountant

This accountant is certified by the Certified Public Accountants and likely holds a college degree in accounting and a master's degree in accounting. 

A CPA can offer bookkeeping services, but the cost of hiring one could be prohibitive. The cost of an hour of bookkeeping services can be $50 or more.

(Most CPAs utilise an employee from their company (such as a bookkeeper) to undertake bookkeeping services rather than handling them themselves.)

Option 2: Do it yourself

The era of maintaining ledgers on paper is over. Today, professionals and everyday consumers can use user-friendly software and cloud solutions. 

Option 3: Combine Your Efforts 

You can work with a bookkeeper to get started with your accounting. Seek out someone who is knowledgeable about the software you intend to utilise. 

Accounts, which function like folders and hold your data, can be created by the bookkeeper. 

You can make tax return preparation simpler by setting accounts that mimic the categories used for tax purposes (whether you do this or you use a paid professional).

Why Especia?

While it's exciting to see sales rise as your e-commerce business expands, maintaining a record of your finances may take up the time that you need.

You can save a lot of time and headaches by having our finance specialists at Especia maintain track of the statistics on your behalf. 

We collaborate with thousands of additional online merchants as India's top accounting provider, and we constantly produce dependable, accurate financial reports suitable for tax preparation.

If you need additional assistance, our comprehensive financial services provide unlimited tax counselling and strategy planning. Even assist you with filing your taxes!

While starting a business can be difficult, you don't have to sacrifice the time and resources required to concentrate on Excel or QuickBooks. 

You can focus your efforts on the parts of your company that require them the most. We can guide you on the rest.

Whatever method you choose, make sure to keep your personal accounting separate from any accounting for any businesses you own. Your household budget should account for the cost of this accounting.

Personal accounts are logbook accounts that record transactions pertaining to people or other entities with whom your business conducts business directly. Personal accounts include, but are not limited to, clients, suppliers, employee salary accounts, employee payroll accounts, owner capital accounts, etc

Tracking spending and income, preparing taxes, and other common accounting services are only a few examples. Producing accurate financial records and upholding effective recordkeeping procedures are key components of accounting.

The ability to track financial income and expenditures, manage operations, and maintain statutory compliance are all critical aspects of running a corporation that can be utilised to inform business decisions.

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