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 lies 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, bookkeeping is crucial in times of audit since it solely manages your transactions and organizes the necessary invoices making it livable for you without the last minute chaotic scrambling.
Maintaining invoices even after 5 years of the transaction is required in some countries. In such cases, a clean audit trail is also much required for making the dealings with the government a trouble free one.
Thirdly, banks do not tolerate any messy bookkeeping reports especially in case of granting loans or any extra funding. If you need the same for your business expansion purposes, you need to provide all clean financial statements as a part of the approval process without which the banks would simply say 'no'.
In case of attaining a clean exit, that is, if you want to sell off your business, bookkeeping is essential since the one thing that your prospective buyers would want is clean bookkeeping records for at least the last few years.
Lastly, proper bookkeeping is essential for making tax filing easier. Termed as the most difficult task in any year, well organized reports which are up to date makes life livable through this.
You can now focus your thoughts on how to reduce the tax liability rather than deal with confusing financial statements.
It can be concluded that it is extremely difficult for any business to survive without bookkeeping hence it is always a good idea to outsource the said activity to an external expert if the businessman cannot do it on his own.
Apart from saving a lot of time and money you also remain a lot relaxed and assured that your financials are in safe hands, prim and proper in shape without any sort of loopholes.
Author Resource:
Please visit http://www.essex-book-keeping.co.uk for more information. Find out about Brentwood bookkeeping . Find out more information about Brentwood bookkeeper services from this site.
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