Finance management is important in any business regardless of its size for any business that lacks proper management of finance is bound to be wiped out. This is the point where bookkeeping is so important.
But what is bookkeeping? In its broad concept, bookkeeping is the activity of writing, classifying, and safeguarding the business transactions.
This makes sure that all the records are complete and current, and this makes it easy to conduct business, prepare for taxes and to also meet legal requirements.
In this case, readers are told that there is no operation of a business entity that is not in some way affected by bookkeeping.
Further, we will also explain how the bookkeeping services in India have become popular all across the globe.
What is Bookkeeping?
The literal meaning people give to the term bookkeeping associates it with the identification and documentation of all business transactions.
They may consist of the sale, purchase, receipt and payments, among others.
Bookkeeping’s objective is to ensure that each and every financial transaction in the business is recorded for documentation purposes to ensure the business has a proper record of all its financial transactions.
Bookkeeping and its importance is closely related to and sometimes defined as accounting but they are not the same.
In other words accounting involves putting together figures so as to come up with informative and good decisions while book keeping only involves keeping record of day to day transactions.
It is at the core of accounting, as it supplies the core data, on the basis of which accountants make their reports.
Some of the Roles Performed by a Bookkeeper
Bookkeeper has the duty of keeping the records of finances of a business company. Their duties may include:
- Registering of nominal and accrued revenue, receipts and expenditure, sales, purchases and other related transactions.
- Handling of accounts payable and accounts receivable.
- Balancing the records with the bank statements of the business.
- Balance sheet and income statement preparation and any other form of financial statements.
- Record and monitor the pay and other costs associated with the employees of the company.
- Overseeing that the business meets its tax obligations having complied with the laws and regulations in force.
- Bookkeepers may use some special programs to register all the transactions what make the job easier and more accurate. Popular software in the line of bookkeeping and its importance includes quick books, xero, tally and many more.
Why is Bookkeeping so Important to a Business Organization?
Financial Clarity
Another common advantage of bookkeeping that can’t be overemphasized as vital to the success of a company is that it affords the firm’s financial perspective.
When there is no book, or records are kept inaccurately, a person loses track of the expenditure and revenues generated within the business.
Accounting enables each transaction made in the business to be recorded thus providing the business with a true picture as to its estado financiero.
Budgeting and Forecasting
Accounting creates smoother budgeting in various organizations or makes better annual or even long-term plans.
Probably one of the most important benefits is that all of the expenses and revenues are recorded and this helps business owners get the most accurate estimations of their companies’ future financial outcomes.
This enables them to set future goals and forecast on expansion and movement of cash around the business in order to reduce on cash risks.
Tax Preparation
Another reason why one needs to be organized when it comes to relative to the issue of taxes. At the same time, bookkeeping and its importance simplifies the preparation of taxes as all the needed accounting data is accumulated.
A good record is thus important in supporting the business file its taxes on time and meet tax requirements.
It also assist in maximizing deductions and also on preventing or rectifying penalties on tax returns.
Regulatory Compliance
A number of companies are under legal obligation of keeping proper accounts.
Unbalanced accounts can also cause one to be charged higher tariffs, penalties and even legal cases.
Another benefit that businesses can get from record keeping is that they can be able to tell whether they are violating any regulation or law or not.
Informed Decision Making
This means that up to date financial records in business enable businessmen and women to make informed decisions.
Whether the business owns choosing in increasing the capacity of the business, choosing to minimize the cost of the business or choosing to invest on new opportunities, bookkeeping delivers the information that is needed to make these decisions effectively.
For instance if a firm is planning perhaps a huge purchase, then the bookkeeping records reveal whether the firm has the capital to finance the purchase or if the firm will need to borrow.
Efficient Cash Flow Management
Every corporation has its own cash flow, which determines its health; bookkeeping and its importance plays a role in cash flow.
This way business organizations are able to account for cash inflows as well as outflows so that adequate funds are available to meet the costing of the various undertaking.
Accounting is useful in monitoring and processing of bad debts, bill receivables and cash requirements in the future.
Supporting Business Growth
This is because, in the process of growth of the commercial companies, the keeping of their accounts becomes more extensive.
It makes sure that the company can expanding its operations without having to worry about the handling of the finances in the company.
It also facilitates easy access to investors, as well as easy acquisition of loans, since many investors and lenders need disclosure of the firm’s past financial statements before they can invest or provide loans.
Bookkeeping And Its Importance (Services in India): A Increasing Trend
Over the years, India has emerged having bookkeeping services being demanded by several business companies across the globe.
Many companies choose to outsource their bookkeeping tasks to India due to several factors:
Cost-Effectiveness
Buying outsides bookkeeping services in India is highly popular and one of the major factors that encouraged outsourcing is the cost control.
India can provide highly skilled bookkeepers at a considerably lower rate than hiring people in-house in developed countries of the world.
Outsourcing therefore becomes an appealing proposition for smaller businesses who want to cut back on some of their recurrent over head expenditure but at the same time do not want to compromise on quality.
Skilled Workforce
India has international standard qualified experienced people pool in bookkeeping professionals.
These professionals are usually educated on how to use the most modern book keeping software, thus they can offer quality books to businesses worldwide.
Scalability
The outsourcing of bookkeeping services helps to increase the volume of business activities rapidly in India.
When a business scales up its bookkeeping requirements become higher and outsourcing simplifies the process of increasing your bookkeeping capacities without the need to recruit extra employees.
This flexibility is very helpful especially for the start-ups and the up and coming businesses.
Concentrate Business Efforts
Hiring the services of an outsourcing company in India mean that the business owners or managers are relieved from some of the daily routine duties like book keeping, payroll processing among others in order to concentrate in their core business areas like sales and marketing or customer services.
It means that they can devote much more time and effort to the tasks that can be considered as critical for the existence of the company and the generation of its revenues, leaving the accounting and financial documentation tasks for the professionals.
Improved Accuracy
This is because when one hires the service of IT professionals from India, what the latter does is savings of time, efforts and most especially, quality work that is free from errors that may be committed by novices or inexperienced workers.
These professionals are expected to work on big deals, avoid mistakes and always make sure that the company’s accounts are clean. This minimises the possibility of the business making expensive blunders and enhances its general financial prudency.
Conclusion
Finally, it is important to define what is bookkeeping? That which is referred to as accounting is simply the process of documenting every financial transaction that occurs in the business.
Bookkeeping and its importance involves the recording of financial transactions to make the business understandable financially, facilitate in planning of expansion, ensure the company is in the right side of the law, and to help in decision making.
This is a key activity in the management of any organisation whether big or small or whether operating in just one area or many.
Further, the outsourcing of bookkeeping services in India has turned feasible for most of the businesses, who are in the process of cutting their costs and seeking accuracy in their scale of operations.
Employing a professional and educated population and affordable methods, India has established itself as a prime location for bookkeeping.
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