Why is the bookkeeping important to your business?
Bookkeeping is important for any kind of business whether it small or big but nowadays, we see it has neglected the owners of the business. They do not keep any record of accounting transactions. So that reasons business often fails financial management and suffers bad management. Besides, an accounting record is necessary for businesses and it compulsory by law.
In the modern world, legitimate requires that business must record accounting transactions up to date and that surely paid all tax and lending which is required. This ensures transparency and accountability of accountant or business owners. Daily transaction, vouching, recording process of the transaction, then the profit and loss accounts, tax deduction from gross profit then calculate net profit after tax, Retained earning which is calculate the owners capital and balance sheet where shows the eligibility of the payment of the liability of entity.
Importance of bookkeeping is essential for some reasons for your business growth and development. List of the importance of bookkeeping are discussing the details below;
Why is bookkeeping important?
To improve good financial management and analysis:
Although you are so busy and you have not enough time. Nevertheless, it is important to look up cash flow of the business. In the business transactions where the invoice are delayed, daily to daily transactions of business and where the customer is allowed to delay payment because if you have no monitored than your business could fall. Along with bookkeeping, you can follow up all these transactions to create an organized system and ensure the business runs effortlessly. In that case Importance of bookkeeping in small business is essential.
Achieving tax obligation:
Without importance of good bookkeeping, you cannot proper management to record your business transactions. So that reasons, you should keep bookkeeping to trace information and documents for obligations of the annual tax. In annual tax period, you have don’t rush for proper documentation, billing and remembering documents of expenses for the time of tax return. It is making easier to organize financial reporting and without correcting, entries of financial statement intend of your tax advisor give you better tax advice.
Proper keeping record as required law:
The recording process of bookkeeping keeps properly transactions and well organized for small and big business. You can hire an accountant or bookkeeper for organized and well develop your financial structure. It can reduce your labour time and make sure your success. On the other hand, the bookkeeping is farewell bureaucracy from your company. It makes the easy when audit process come.
Easy business planning:
In bookkeeping system, you can measure your progress to evaluate previous year to current year progress graph whether you make profit or loss? Whether you may increase investment or cut off expenditure? This graph shows what you will do in future and what strategy you may apply? Especially when it has comes to the investing questions.
Easy report to investor:
When you have to keep records of transactions of bookkeeping system, you may give a report to an investor on the development of business and financial growth. It becomes much easier for all information and data to provide such as infographics, graph, and charts which are giving the answer how the business is progressing.
To make a sure clean picture of business health:
If you don’t monitor your business transactions, whether business gain or loss? You do not understand well where your business was gone, it is loss or gain. Handling cash in and cash out will help you take the much better decision.
On the other hand, when the question comes in sell your business or raise share capital of your business being the help to company evaluation and raise your goodwill.
If you don’t have an accurate handle on your business income and expenses, how do you know if you’re actually making money? Monitoring cash-in and cash-out can help you make better decisions — before it’s too late.
Besides, when it comes time to sell your business or secure capital to grow your business, being able to thoroughly document your past performance will help your company’s valuation.
Final Notes
In sense, bookkeeping is playing the more vital role to ensure progress, development, and success in businesses. It helps to track your business accounts records, make sure daily transaction recording books, preparing to journalize entries, trail the two sides of accounts balance and make sure both debit and credit side are equal and equilibrium. Preparing the profit and loss accounts to calculation tax obligation and finally preparing the balance sheet for knowing the position of a business health is the most important for the owners and the lenders as well.
Please contact Skytrax Accounting and Payroll Services on 066 234 3768 or email on info@sktraxaccounting.co.za.
