Bookkeeping is a type of accounting service that manages and thereafter analyzes a company's finances be it in any field or business and thereby lays it indispensability.
If you think of a situation where bookkeeping was not present, chances are that you will see yourself scrambling for bills and receipts during tax filing at the end of the year and being completely lost as to the costs and profits of your business, assets and liabilities, dues to and from debtors and creditors.
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.
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.
If you have a small business of your own, chances are that you do the bookkeeping on your own in order to save as much money as possible.
You might be a field operative who is running the show spectacularly but this doesn't mean that you are an expert wit figures and can do bookkeeping equally well. Doing it on your own might result in an error which will get compounded ever year leading to bankruptcy in a few years time.
Remember these are not merely exaggerated statements but hard facts since poor monetary planning is one of the most common reasons of small businesses failing in their first 5 years of operation.
The significance of outsourcing the bookkeeping work to an expert service provider for proper maintenance of financial records is discussed below.
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, if you need to track your transactions and invoices and present the same during auditing activities, bookkeeping is something that you cannot do without. It helps you in doing all this and successfully keeps you from the last minute chaos and scramble.
One needs to maintain invoices upto 5 years of the transaction in some countries. So bookkeeping becomes all the more essential since without good audit record, dealings with governments can take on a definite ugly shape.
Thirdly, book of accounts feature as one of the most important aspects in a loan approval process since without you providing all the financial documents and the like, the banks would just not process your request.
If you want a clean exit by selling off your business, bookkeeping is a must since if not anything you need to provide your clean bookkeeping reports to your prospective buyers.
Lastly, tax filing, the most difficult task as termed by most businessmen will become lot easier if your bookkeeping reports are well organized and updated.
So you can now think about how effectively you can handle the tax burden instead of the confusing business financial statements.
As a conclusion it might be said bookkeeping is too important to overlook and one should outsource it to an external expert if he cannot do it himself.
Bookkeeping will help you in saving both time and money and most importantly give you the much required relation and assurance regarding your financial statements which would now be prim and proper, free from any sort of loopholes.