Bookkeeping is a kind of accounting service that is crucial for all kinds of companies involved in any kind of business. It can be termed as the sole manager and analyzer of the company’s finances.
The necessity of bookkeeping is realized when a businessman needs to see the true picture of his assets and liabilities or costs and profits. Its use is indispensible in tracking the dues from debtors, dues and loans to creditors and during yearend tax filing where without bookkeeping there would be a lot of last minute scramble for bills and receipts.
Cash Flow can be termed as one of the most essential aspects of any business, especially the small ones. In order to get payments from debtors and thereafter source the supplies I the proper time, cash flow statement plays an important role in achieving success in business operations.
During initial business planning or during making any alteration to the business plan later on, the bookkeeping reports and financial statements are referred to in order to assess the estimated budget and expenses.
Small business owners are usually looking for ways to save money and hence there high chance that you are doing the bookkeeping yourself.
Doing this might not be a good idea because in bookkeeping there’s always a chance of getting compounded errors with each running year resulting in a situation of bankruptcy few years from now. Being a successful field operative does not necessarily make you a bookkeeping expert as well.
Always remember these are hard facts and not just exaggerated statements because countless examples exist of companies who have failed in their first 5 years of operations only because of poor monetary planning.
The necessity of maintaining financial records properly are manifold. These would be discussed one by one below along with the effectiveness of outsourcing this responsibility to an expert bookkeeping service provider externally.
Firstly, bookkeeping is a must for proper business planning. A businessman needs it to identify successful ventures and the ones that are gradually becoming a liability. Moreover, it facilitates problem identification and solution.
Secondly, bookkeeping is crucial in times of audit since it solely manages your transactions and organizes the necessary invoices making it livable for you without the last minute chaotic scrambling.
For several countries, maintaining the invoices even after 5 years of the transaction is necessary and government dealings can become quite a hellish experience in case you do not possess a clean audit trail.
Thirdly, remember that banks refuse any proposal for loan or any extra funding requests without proper submission of bookkeeping reports and financial statements as a part of the approval process. If you fail to provide the same, your request would most certainly meet a refusal.
For a clean exit bookkeeping is essential since the prospective buyers need clean financial records for at least the last few years of operation.
Lastly, well organized bookkeeping reports makes tax filing, undoubtedly one of the toughest tasks as voted my majority businessmen, a lot easier.
Therefore, how to reduce the tax liability can be now be concentrated on instead of the confusing and chaotic financial statements.
It can therefore be safely concluded that if a businessman cannot undertake bookkeeping on his own, the best thing to do would be to outsource it to an external expert because it is too important to dismiss.
You can now save both time and money coupled with relaxation and assurance regarding the nature of your financial statements. They would undoubtedly remain prim and proper and free from loopholes.