What Is Bookkeeping, And Why Is It important?
Bookkeeping is the process of keeping track of all documentation of a company’s financial activities from start to finish. Depending on the accounting standards used by your company, business owners or bookkeepers record business activities using supporting paperwork. Bills, receipts, invoices, purchase orders, and other financial papers that reflect a transaction are examples of documents.
Proper bookkeeping aids in the maintenance of accurate financial records, which is needed by law for tax purposes. Aside from the legal requirements, excellent bookkeeping has practical business benefits. The following are some of the reasons why effective bookkeeping is so important to a successful business:
- It’s easy to assess your financial resources and forecast cash flow if you’ve recorded your income and expenses.
- Bookkeeping aids in the preparation of financial statements for your business. These statements can be used to track cash flow and help you analyse the strengths and weaknesses of your business.
- Financial statements can also show which ideas worked and which didn’t, which can aid business owners and shareholders in making plans.
Bookkeeping Services Offered:
There are three main parts to bookkeeping. These are debtors, creditors, and bank reconciliation. The persons or businesses who owe you money are referred to as debtors. It is common to see business owners become so engrossed in their work that they forget or don’t have time to pursue outstanding debts. Creditors are people or companies to whom you owe money. These are the individuals from whom you have purchased goods or services. They will send you an invoice with the payment terms on it at the time of purchase, and ideally, they would also send you an end-of-month statement. The process of reconciling the bank account balance in an entity’s books of account to the balance provided by the financial institution in the most recent bank statement is known as bank reconciliation. There are also many additional services like payroll and cashflow reporting to name just a few.
Why Outsourcing Bookkeepers Are Beneficial:
Most businesses can benefit from accounting and bookkeeping outsourcing. Maintaining a local in-person bookkeeper can be a waste of time and money for most businesses. Most companies can profit from employing an online bookkeeping service. Below is a list of a few of the many benefits of outsourcing your accounting below:
- Minimise personnel: Managers can focus on growing their business instead of getting stuck down in the details of managing staff when they outsource. Outsourcing is one of the simplest solutions for small and medium businesses to reduce overhead costs. Partial outsourcing even works for large businesses.
- Mobility: Your company becomes less reliant on a single location. This gives you more freedom in terms of where and how you run your business. It doesn’t matter if you’re running your business from an office or on the beach with a remote bookkeeper.
- Expertise: Most people will quickly discover that there are numerous subtle intricacies to keeping proper financial records, and most business owners don’t have the time (or patience) to learn how to do so (nor should it – it’s not why you went into the business)It’s usually advisable to outsource bookkeeping to a professional bookkeeping practice rather than be delayed and dissatisfied.
- Privacy and Security: Individual conflicts between managers and staff are the most typical source of security breaches. Accountants and bookkeepers are entrusted with some of a company’s most sensitive data.
Having a committed financial understanding of your business will have a huge impact on its exponential growth. Outsourcing your bookkeeping functions can help you save on operating costs, scale up as your company grows, eliminate payroll issues, and free up time to focus on your core business. 3rd Arm Admin offers comprehensive bookkeeping services that go beyond the basics. We give you proactive guidance that will help you increase your efficiency and make better financial decisions. Here’s where you can learn more about our transformative bookkeeping services.