Bookkeeping can be termed as the sole analyzer and manager of a company's finances irrespective of the kind of business it is in, and here lies its importance as an accounting service.
Without bookkeeping a businessman cannot understand his costs and profits or the assets and liabilities that he has. Moreover, it will be very difficult for him to keep track of the overdue customer payments or bills and loans that he has to pay back. Tax Filing will also become immensely difficult without this due to last minute scramble for bills and invoices.
The cash flow can be said to be the most essential element in case of a small business where getting payments from customers in a timely manner and using it to source supplies are vital aspects of achieving business objectives.
Bookkeeping reports are necessary for a businessman during creation of the initial business plan or making any modification later thereof. The financial statements ensure keeping track of the budget and the estimated expenses thereof and help the businessman to achieve his desired results.
Chances are that you do the bookkeeping yourself for your small business so as to save as much money as possible.
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.
Do not make the mistake of thinking these as mere exaggerated statements. On the contrary, these are sheer hard facts since the most common reason for a company's failure in its first 5 years of operations is ineffective monetary planning.
The importance of proper bookkeeping and maintaining the financial statements would be discussed in the following paragraphs along with the effectiveness of outsourcing the same to an external bookkeeping service provider.
First and foremost, bookkeeping is necessary for businessman in order to create a sound business plan. Thereafter, it is required in assessing the status of the ventures he has invested in. The ones which are running successfully and the ones which are becoming a liability. Apart form this, bookkeeping also facilitates correcting of problems if there are any.
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.
Some countries need the invoices to be recorded and archived even 5 years from the date of the transaction. Remember, dealing with the government can become a hellish experience if you do not have a clean audit record.
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'.
For you to get a clean exit while selling off your business, bookkeeping is of utmost importance since your prospective buyers would want to see the financials of at least the last few years of operation.
Lastly, one of the areas where bookkeeping plays the most important role is that of tax filing. Termed as one of the hellish activities for businessmen it can be made quite easy by maintaining up to date and well organized bookkeeping reports.
Thus, your thoughts can now be focused on ways to reduce tax liability rather than with confusing financials.
As a conclusion it might be said that the matter of bookkeeping is too crucial and important to overlook and hence should be outsourced to an external expert agency if not done internally.
One can be relaxed and assured that his financial statements would be prim and proper without any loopholes and can also save a lot of time as well as money in the process.
Author Resource:
Please visit http://www.essex-book-keeping.co.uk to find out more about a successful Brentwood payroll . Your business will prosper with a Brentwood purchase ledger clerk .
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