Once you have maintained an accurate organized bookkeeping, it will be much easier to pay taxes on time.
Businesses of all shapes and sizes must have proper bookkeeping as this helps them track and maintain accurate financial records. It keeps precise and up to date records of your financials. Without proper bookkeeping and accounting, any business is most likely to fail in just a span of time.
But what really is bookkeeping? What are its roles to a business, and why is it important to every organization?
What is Bookkeeping?
Bookkeeping is basically the process of recording, maintaining, and organizing of financial records that comes in and out of the business. It also involves making use of a software tool to make it easier for businesses to document all financial transactions accordingly and securely.
Apart from maintaining and securing organized financial records, bookkeeping has also other significant benefits to a business. It helps businesses budget their future finances, as they have a clear visual of their current financial status. It makes it easier for businesses to prepare for their taxes and it also makes it easier for businesses to have better decision making. And lastly, it helps businesses, especially small business owners to manage their finances properly.
Bookkeeping facts
As for many small business owners, bookkeeping is usually something that the business owner handles. It is usually due to the fact that hiring a whole accounting team isn’t something that they could afford yet.
Here’s a list of facts to help small business owners have a better understanding about bookkeeping:
Bookkeeping options
Small business owners have three options in their bookkeeping. One is to “do-it-yourself”, however, know that bookkeeping is time-consuming. Second option is to outsource to an accounting firm, this also helps in seeking expert financial guidance. Last option is by making use of bookkeeping software.
Maintain consistency
Whether what type of software you use, or whoever handles your bookkeeping, take note that maintaining consistency is essential. Have a weekly, monthly, quarterly and annual run through your financials.
Usual bookkeeping accounts
Small businesses usually have these following accounts, accounts receivable, accounts payable, inventory, cash, payroll expenses, loans payable, owner’s equity, and retained earnings. If these accounts are recorded correctly and accurately, then bookkeeping will be successful.
Bookkeeping is done by a bookkeeper
Bookkeeping is typically performed by a bookkeeper. Part of the main roles of a bookkeeper is to record daybooks which includes sales, purchases, payments, as well as receipts.
Organized bookkeeping helps pay taxes on time
This is true to all kinds of businesses. Once you have maintained an accurate organized bookkeeping, it will be much easier to pay taxes on time. This helps businesses owners to be relieved from the stress of procrastinating during tax season.
