One of the core aspects of any company doing business in any field is bookkeeping. Bookkeeping can be said to be a kind of accounting service that manages and analyzes a company's finances.
Bookkeeping is necessary in order to be breast of your business's profit and loss status or asset and liability ration. Without it, a businessman cannot keep track of the various dues from debtors and the outstanding payments to creditors. Moreover, he might end up scrambling for bills and receipts at the time of tax filing at year end.
Cash Flow can be termed as one of the most essential aspects of any business, especially the small ones. In order to get payments from debtors and thereafter source the supplies I the proper time, cash flow statement plays an important role in achieving success in business operations.
During the mapping of the initial business plan or later when it needs to be modified, the businessman needs the help of these bookkeeping reports and financial statements so as to efficiently track the budget and estimated expenses in order to achieve 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.
Doing the bookkeeping yourself might not be a good idea since errors might crop up and more importantly they might get compounded with each passing year resulting in a situation of bankruptcy a few years down the line. Sure you are a great field operative but does it necessarily mean that you are an expert in reading figures?
Always remember these are hard facts and not just exaggerated statements because countless examples exist of companies who have failed in their first 5 years of operations only because of poor monetary planning.
The importance of maintaining financial records properly are manifold. These are enumerated below along with the effectiveness of outsourcing the responsibility of it to an external expert bookkeeping service provider.
Firstly, in case of proper business planning, problem identification, solution thereof and identification of successful ventures and the ones which are becoming a liability, bookkeeping is a must for any businessman.
Secondly, bookkeeping is indispensable in case of auditing activities. Undoubtedly the importance of bookkeeping is realized during the time of audit as it makes tracking of transactions and organizing your invoices easier.
For many countries, even 5 year old invoices need to be archived and without a clean audit trail, dealing with the government can become quite a hellish experience.
Thirdly, loans and extra funding that you might require for expanding your business would meet a dead end at the banks if you do not provide them with the necessary financial statements and bookkeeping reports as a part of the approval process.
Remember, that the details of the last few years of operations in the form of clean bookkeeping reports and financial statements to show to the prospective buyers is a must when you are selling of your business, i.e. a clean exit.
Lastly, if you don't want to rush at the end of the year, then well organized and up to date bookkeeping records will make a difficult task such as tax filing a lot easier.
Therefore, how to reduce the tax liability can be now be concentrated on instead of the confusing and chaotic financial statements.
It can therefore be safely concluded that if a businessman cannot undertake bookkeeping on his own, the best thing to do would be to outsource it to an external expert because it is too important to dismiss.
You can now save not only time but also money apart from being relaxed about your financial statements. They would most definitely be prim and proper now.
Author Resource:
For more information please visit http://www.essex-book-keeping.co.uk. Learn how to handle payroll . Find out about how an efficient purchase ledger clerk will help your business from this site.
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