24

Mar 2014

Category: Bookkeeping
Written by Super User
1397

Bookkeeping, a kind of accounting service, can be said to be one of the most important aspect of any company in any business since it solely analyzes and manages 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.

One of the most important aspects of business is the cash flow statement which needs to be maintained properly so as to facilitate timely payments and in turn timely supplies for the business to succeed.

Bookkeeping reports and financial statements are mainly required for creating the initial business plan or even altering it later since these facilitate tracking the budget and estimating the cash outflows thereof n order to reach the desired results.

In case you are a small business owner, chances are that you do your own bookkeeping snce more than anything else you want to save money.

Even if an individual is a great field operative and running the entire show well does it necessarily make him a bookkeeping expert too? The answer obviously is no. And doing this might result in compounded errors resulting in a situation of bankruptcy in a few years time.

The fact remains that poor monetary planning is one of the most common reasons for a company's failure in the first 5 years of its operations. Thus, the above statements are all hard facts and not exaggerated statements.

The necessity of maintaining financial records would be discussed below along with the effectiveness of outsourcing the same to an expert bookkeeping service provider.

Firstly, in case of proper business planning, bookkeeping is absolutely essential as it enables the businessman to identify the ventures doing well and the ones becoming a liability. It also goes on to correct problems 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 some nations you need to keep invoices even after 5 years of the transactions. More importantly, without a good audit record, dealings with the government can become quite nasty.

Thirdly, in case of loans or any extra funding that you might need for your business, you need to show proper bookkeeping reports without which the banks would surely refuse your request since it is an important part of the approval process.

If you want to sell off your business, remember that bookkeeping is essential for a clean exit because the first thing that your prospective buyers are going to ask for is clean financial statements for at least the last few years.

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.

The necessity of bookkeeping can never be denied and hence it is always a good idea to outsource the same to external expert service providers if the businessman cannot do it himself.

Along with saving time and money you will be assured and relaxed that you financials would be proper without any loopholes whatsoever.