Bookkeeping refers to the process of recording your company’s day-to-day financial transactions, these include sales, purchases, receipts, and payments. This makes up the first basic steps of the accounting process to enable you to carry out any reporting, classifying and analysing of data but this cannot take place if the bookkeeping is not organised and accurate.
In addition, bookkeepers fulfil the role of ensuring that all transactions are properly recorded which is usually done using the appropriate computer program. A bookkeeper is also vital in supporting the business owner or manager to run their business efficiently and effectively.
The importance of bookkeeping cannot be emphasised enough, but here are some reasons why this is essential to the health and life of your business.
1. Fulfilment of tax obligations
Keeping your bookkeeping up to date will make sure that all compliance tax filings are done properly and in a timely manner to avoid unnecessary late filing penalties. Business owners don’t have to rush anymore to find all those bills or try remembering expenses when tax time comes.
Tax returns are made easier with an organised Cash Flow, Balance Sheet and Profit & Loss. Your tax advisor will commit time to give you sound tax advice instead of correcting entries in the financial statements.
2. Accurate financial reports
Financial reports like the balance sheet, income statement and statement of cash flow are critical for executive leadership and ownership. All the information that is included here comes from the general ledger system, which is updated by the bookkeeping process. Precise financial reports let business owners make strategic decisions in a confident manner and they also help keep a business alive.
If there isn’t sufficient money to make payroll or meet the obligations the business faces, business owners must know and take the suitable steps to correct the situation. Without accurate reporting, your business can go off course and management won’t know until it’s too late. This is especially true when it comes to cash flow and capital structure. Too much debt and high payments can spell disaster for your business. Bookkeepers are vital for tracking issues.
3. Reporting to investors is easy
The procedure of reporting to your investors on vital information about the financial status of your company is no longer a worry. From charts or graphs to lists of data it can all be presented to them in an orderly fashion.
If you find yourself needing to implement a bookkeeping process, you should consider hiring a bookkeeping professional at Chippendale & Clark to do it and keep your financial aspect organised and intact. Contact us today on 01249 465 435 for more information.
Share this Story