Bookkeeping is essentially an accounting service that manages and analyzes a company’s finances making it one of the most important aspects for the entity be it in any business.
If bookkeeping was not there, a business would have been lost as to his costs and profits or assets and liabilities. He would never have realized his dues from his debtors and would have lost track of his the very many bills and loans that he needs to pay back. Moreover, he would have had to undergo the last minute scramble for bills and receipts at the time of yearly tax filling.
An important aspect in a business is the cash flow which needs to be maintained properly. It is something that needs to be continuously considered especially in a small business. Thus, payments must be collected at the right time so that sourcing of supplies and payments thereof are facilitated for the business to succeed.
Bookkeeping reports play a role during the initial creation of a business plan and even when it is altered later on. They help keeping track of the budget and the estimates costs and enables the businessman to reach his desired success level.
If you have a small business of your own, it’s a possibility that you are doing all bookkeeping activities on your own in order to save money.
You might be a field operative who is good at running a business but that does not necessarily mean that you balance books and understand figures too well. But this might not be a good idea as it might lead to compounded book keeping errors and a situation of bankruptcy in a few years time.
Remember these are not merely exaggerated statements but hard facts since poor monetary planning is one of the most common reasons of small businesses failing in their first 5 years of operation.
The significance of outsourcing the bookkeeping work to an expert service provider for proper maintenance of financial records is discussed below.
Firstly, the importance of bookkeeping can be realized during creation of a proper business plan. With the help of it, a businessman can identify which ventures are operating successfully and which ones are becoming liabilities. Moreover, bookkeeping helps to solve problems if and when they arise.
Secondly, the indispensability of bookkeeping glares at us during auditing times. The last minute chaos and scrambling for invoices is kept at bay by efficient transaction tracking and invoice management by bookkeeping.
In many nations you need to keep invoices even up to 5 years and one should remember that without a clean audit record, dealings with the government can become quite clumsy.
Thirdly, when one needs loans or some extra funding from the bank for business expansion purposes, he needs to provide all bookkeeping reports and financials as a part of the loan approval process without which the banks would never process his loan.
Moreover, if you ever want to sell off your business, you will need clean financial statements for at least the last few operating years to give to the prospective buyers without which you will never get a clean exit.
Lastly, tax filing is a tough time when usually one needs to scramble for financials at the last moment. One can make this hellish task a lot easier by maintaining well organized and up to date bookkeeping records.
Hence, an individual’s focus can now be safely on the means to reduce tax liability than on the confusing business financials.
As a conclusion it might be said bookkeeping is too important to overlook and one should outsource it to an external expert if he cannot do it himself.
Apart from saving a lot of time and money you also remain a lot relaxed and assured that your financials are in safe hands, prim and proper in shape without any sort of loopholes.
Author: ameliatraverneThis author has published 44 articles so far. More info about the author is coming soon.