What is Bookkeeping? To provide you with a basic aggregative answer, the task of bookkeeping includes the systematic recording and organizing of financial transactions in a company and reconcile the company’s financial accounts, typically on a monthly basis.
However, that is an oversimplified explanation as the role of a bookkeeper is multifaceted. Keep reading this article to understand what the functions of a bookkeeper are as we define bookkeeping and explain how it is ancillary for the growth of your business.
What is Bookkeeping?
Bookkeeping is the task of tracking the flow of revenue in and out of a business or organization. This lets owners and other stakeholders assess profit margins, cash flow, long-term debt and other factors that are vital to making business decisions. The job can also involve handling a business’ taxes, payroll and billing.
Since basic bookkeeping software is often a key component of these processes, you’ll need to be proficient with computers and accounting software programs. Depending upon an organization’s size, bookkeepers either work independently or as part of a team, especially when handling larger accounts.
Typical financial transactions and tasks that are involved in bookkeeping include:
- Billing for goods sold or services provided to clients
- Recording receipts from customers
- Verifying and recording invoices received from suppliers
- Paying suppliers
- Processing employees pay and the related governmental reports
- Monitoring individual accounts receivable
- Recording depreciation and other adjusting entries
- Providing financial reports
If you happen to be looking for a bookkeeper at a low price, you can outsource that task to our professionals at Accounts Confidant.
Also Read – A Complete List of Questions to Ask Your Bookkeeper!
Why Bookkeeping is beneficial for your business?
The following are the ways in which bookkeeping helps in the growth of your business:
They help you in cutting costs and save up on expenses
Once you employ a basic bookkeeping team, they will familiarize themselves with the financial model of your organization. As time progresses, they can offer you with advise on your spending habits.
They will provide you with steps to save up on expenses that you may not actually require. They will find a better alternative so that you can save money that can be used for future ventures.
Time management and growth
Enlisting someone that deals with both the reports of monthly finances and the taxes of your business make your job easier. Once bookkeepers have an idea of what your business is, they help you in saving time and money. That pretty much defines bookkeeping.
Moreover, once your business starts growing, you will be equipped with resources to handle it. They can come up with strategies that will help you in navigating through uncertainty and unfamiliar territories. Also, they are great at finding opportunities which is exactly what you need if you are a freelancer or a startup.
Generating a business plan
By being up to date with the transactions of your business you can supervise all the plans and proceedings. This will help you in detecting and resolving any issues before they ever have a chance of becoming a threat.
Taking the aforementioned precautions is way better than taking care of your finances once a year. It might leave a lot of room for errors to occur in your business.
Offer you with expert consultancy
A veteran bookkeeper can provide you with recommendations on functions that will help in turning your business into a success.
Functions like, how to make better amendments in your transactional procedures, how to follow up on late payments, or what kind of tax credits you may be able to receive.
Accurate accounting
Without orderly basic bookkeeping, you might be unable to gain an understanding of the performance of your services and products. These products and services might be making or losing you money by the end of the year.
By staying consistent with your bookkeeping tasks, you will be equipped with the knowledge to manage your capital accordingly. Furthermore, you will be able to make sure that you are earning a profit in your business.
Management of your cash flow
The key ingredient to the survival of a small business is the proper management of your flow of cash. Uniformed and timely bookkeeping provides you with a data of the customers that have paid for your service. Furthermore, doing so enables you to follow up on the late payments.
You will be up to date about the amount of money you are raking in. Consequently, this will allow you to come up with a budget for the remuneration of your staff and suppliers. You will also be able to create a budget for bigger investment ventures.
Assistance with keeping your accounts in order
A timely operating basic bookkeeping procedure is the key to success for any up and coming business. Furthermore, bookkeeping experts can assist you in properly maintaining your business by tracking your payments, receipts, sales and purchases.
A bookkeeper makes sure of the fact that all of your transactional records match up and are accurate.
Makes your business profitable
Owning a business comes with a lot of advantages. There are some areas of your business that can be written-off as internet bills, travel expenses, phone and utility during tax season.
However, taking an advantage of all these areas is impossible if you have been merging your personal and business financial records together.
Preparing for tax season
Bookkeeping plays a very crucial role when it comes to filing for your personal tax return. As a business owner, the majority of your income is rendered from your services and products. In order to find out about what your exact earnings are, you will need to know how much your business raked in first.
Once you have a proper bookkeeping system inculcated in your firm, you can have your financial records prepared for taxation. In place of scavenging for receipts, invoices and other bits of transactional documents, all of your financial information is stored systematically into one place.
Clarity when making decisions
Once you have your financial documents together, you get a clear idea of where your expenses and profits lie. You can utilize this information to shape your budget in any way that acts as beneficial for your firm and will be equipped with a bird’s eye view into your business.
You can come up with plans that will help you in scaling your business. As a result, you will have an idea of what you don’t need and get rid of things that are of no use to you. Bookkeeping doesn’t have to be a strenuous and time-consuming job. To make things easier for you, there are software programs out there that enable you to manage your bookkeeping tasks in an autonomous fashion.
However, whilst running a business, you are already dealing with too much as it is. This is where you should start considering outsourcing your bookkeeping responsibilities as a viable option.
And that is why bookkeeping is essential for the progress of any business
We hope this article answered the question of “what is bookkeeping” and explained the importance of enlisting a proper bookkeeping system. If you have any further queries when it comes to the aforementioned topic, please feel free to contact Accounts Confidant @ +1-866-301-2307. Our team of experts will make sure that all your queries and fiscal woes are resolved.
