The key to running a profitable business is maintaining records and converting them into decision making insight whenever needed.
In case of small businesses, proper bookkeeping can help them grow and become a profitable entity.
Unfortunately, small business owners are often not aware of what bookkeeping entails. Let’s cover some basics here:
What Is Bookkeeping?
Bookkeeping refers to keeping track of all organizational expenses. Bookkeepers keep their eyes on all transactions that the business is involved in.
They keep an eye on revenues that the company has earned. They also guide business owners on matters like filing taxes.
This process needs to be conducted on a regular basis throughout the year in order to ensure that the company is in a good position from a financial point of view.
Book Keeping Is Different From Accounting
People often confuse bookkeeping with accounting, however, both are significantly different. The purpose of bookkeeping is to manage the finances of the company.
Accounting on the other hand revolves around using the finances of the company in order to evaluate its performance and create strategies for the future.
Book keeping revolves around entering financial data in excel spreadsheets along with maintaining the receipts. Whereas, accounting involves additional activities which include:
- Planning for taxes
- Creating budgets
- Creating forecasts of the business’s performance in the future.
Importance Of Book Keeping
Some of the reasons book keeping is so important for businesses include:
It Helps Save Money On Taxes
People who have just recently started their business might not be aware of the tax rules and regulations. As a result, they might end up paying higher taxes than they are supposed to.
Bookkeepers can help owners determine the tax deductions that they can receive. This way they can help the business save money on taxes.
Improves Your Credit Standing
Small companies often need to take loans from financial institutions in order to stay operational. However, banks and other institutions wouldn’t provide you with a loan if your company’s finances are not properly managed.
Book keepers help ensure that all of your finances are properly managed and help potential investors get an insight into the financial position of the company. This also makes it easier for the companies to secure loans.
They Can Identify Errors In The Statements
The main goal of the book keeper is to make sure that balances in the company’s books reconcile with the balances in its financial statements.
They can identify any kind of discrepancies which might exist in your statements and adjust them accordingly.
Virtual Book Keeping
With advances in technology, companies now have the option of turning to virtual book keeping services. Virtual book keeping allows the accountants to manage the company’s finances from a remote location.
Companies also have the option of outsourcing the responsibility of keeping records. Get in touch with us. Our team of professionals can help maintain your company’s financial records. We also offer additional services like payroll management. You can contact us at 832-913-8536.