A smooth business operation requires a backbone of accounting and bookkeeping. No matter the business size, the importance of Accounting and Bookkeeping Services for startups, MSMEs and even corporates remain perennial.
Here is where the need for
bookkeeping comes in. The size of the business does not matter as it is an
essential aspect that all businesses should abide by. Many businesses fail due
to improperly managed accounts and financial mismanagement.
Now let’s get into the core of
the topic to understand it better.
What is Accounting?
It is a process to keep a track
of business’ financial status. It starts with the process of bookkeeping and
finishes with reporting data and information as a financial statement at the
end of every financial year.
1. Evaluating business performance
Financial records reflect the
company’s financial position. This also leads to comparing accounts of previous
years with that of the current one to keep a track of business results.
2. Manage and monitor cash flow
Keep a close watch on the working
capital and cash requirements to gauge business’ financial standings. This is
only possible if your books of accounts are well-organized.
3. Keeping business compliant
A company will realise its duties
if it records the liabilities with precision. The timely payment of registrations
and payments ensure that it stays compliant.
4. Ease of future projections and budgeting
The accounting data helps in
preparing the budget targeted towards a specific business strategy. It also
helps the company in by providing it with many different financial reports that
are essential for day-to-day business operations.
5. Simplified Filings
Filing statements with regulators
and stock exchanges for tax are simplified with accounting. Filing formalities
are fulfilled with least efforts with ROC and stock exchange (if a listed
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What is Bookkeeping?
It is a timely recording of the
company’s financials and managing its book of accounts. An individual person or
an organization maintains this in an orderly method with all the financial information-involving
purchases, sales, receipts and payments.
Why is bookkeeping important for business?
1. Better financial analysis and management
Cash flow management is one of
the most important things to focus on. Unorganized account management will have
you end up doing everything in the last moment. In addition, this can create
issues in terms of decision-making company. Bookkeeping can organise it from
up-to-date follow-ups, invoicing and on-time payment for suppliers for
2. Fulfilment of Tax Obligations
To keep track of any information and documents, bookkeeping is vital. You don’t have to rush anymore to find all those bills or try remembering expenses when the time for filing tax returns comes. An organized balance sheet can sort all your queries related to cash flow, profit, and loss, which gives you ample time to focus on important things like tax saving and finance management.
3. Reporting to Investors is Easy
The books of accounts have all
the information relating to the company financials so making reports and
gauging the company’s’ financial status is easy. It comprises of charts, graphs
to lists of data, that makes it easier to build trust in the company, as there
would be no confusing information. This will increase the investor’s trust in
4. Business Planning is Easy
The habit of bookkeeping makes
business planning much easier. One will always have a track of all financial
details and know if the company is on the right track.
5. Proper Record Keeping as Required by Law
Bookkeeping keeps record keeping
properly organized from small to big/invoice. It makes the retrieval process
easy during an audit.
Accounting and bookkeeping are followed by the auditing process. Know when auditing is mandatory for business based on its structure.
Though the habit of bookkeeping
looks irrelevant, it is the major step that can decide your company’s future.
From fulfilling tax compliance to bringing in investors, book-keeping and
accounting help in many ways. Choose a trustworthy bookkeeping service (offline
or online) for your business to take data-backed decisions.
LegalWiz.in provides bookkeeping services that help in keeping your financial records up to date. Make sure your financial management is done timely and by professionals as it is crucial to a company and can make it or break it.