A lot of planning and investment goes into a business before it is started. And there are a lot of important functions and operations that a business has to carry out efficiently and consistently to create a profitable revenue. One such key operation is the age-old profession of bookkeeping.
This blog will help you understand just how important bookkeeping is for every business.
What is Bookkeeping?
Bookkeeping service is the process of recording the financial transaction of an organization in order to maintain a book of accounts that consolidates accurate financial information.
Bookkeeping is a legal requirement for every business and it ensures the correct payments of taxes. Having a good bookkeeping ethic is crucial to any business’s financial health. For more detailed information on bookkeeping, visit https://en.wikipedia.org/wiki/Bookkeeping
Types Of Bookkeeping Service
- Single-entry system
- Double-entry system
Single-entry System- A single-entry accounting is a form of bookkeeping in which financial transactions are recorded in a single entry in a journal. In this system of bookkeeping, both the aspects of transactions may or may not be recorded, because of which it is called unscientific or an incomplete method for recording transactions.
Double-entry System- It is a bookkeeping system in which all the aspects of a transaction are recorded- credit and debit, meaning a complete record of transactions will be maintained. It is the most used type of bookkeeping and is considered a scientific method.
The Objectives Of Bookkeeping
- By definition, bookkeeping is the process of systematically organizing financial information. Having a thorough and updated record of financial transactions will help you detect any errors in revenue or cash-flow of the company.
On the contrary, if the bookkeeping is not up-to-date and it is lacking behind, it may cause huge financial setbacks in that disproportionate financial statements that may lead to conflict with investors and regulatory authorities.
This particularly true for small businesses that can’t afford to hire accountants.
However, there are a lot of accounting firms that help businesses stay on track with their outsourced accounting services.
- Bookkeeping helps you with financial analysis and allows you to analyze business performance.
It gives you insights about important business information that helps you to plan ahead and create a financial roadmap for your business, thus helping you in strategizing and planning ahead for the future.
Financial analysis includes tracking budget, cash inflow and outflow, revenue generated and expenses. It also allows you to compare financial progress with the preceding years.
- One of the main reasons why bookkeeping is important for business is it helps you with the taxation process. Instead of scrambling through months old receipts and invoices, an organized and updated ledger will have all the necessary information in one centralized system.
Timely bookkeeping ensures all the necessary information and relevant documents are at your disposal while doing the paperwork.
Filing taxes also becomes less tedious with organized profit & loss, balance sheet, cash flow, and timely records. It also helps you with filing personal taxes as your personal income depends on how much your business has earned.
- As a business owner, you will be required to present reports of the financial health and progress of the company. With an organised bookkeeping record, you will have access to every kind of data for these reports and presentations.
- Bookkeeping helps you in maintaining transparent records of your financial transaction which helps you maintain transparent records. These records will come in handy when you have to prove that your company abides by the law the governing authorities.
About CFO Angle
CFO angle is a company offering key financial services to businesses that include Accounting services, Internal audits, outsourced services, tax accounting services, legal services, outsourced bookkeeping services in Bangalore, Mumbai, Pune and Chennai.
CFO Angle offers full-scale outsourced accounting and bookkeeping services to cater to your needs. We combine efficiency and accuracy to help your business excel. Our professionals have years of expertise to make sure your business achieves more than, each year.
Engaging our outsourced bookkeeping service will help your business in:
- Financial statement preparation and report creation
- Staying up-to-date with the latest regulations
- Accounting system setup for new businesses
- Assisting you with the day-to-day tasks associated with bookkeeping
- Sales Tax Return Preparation