The Important Job Of The Independent Bookkeeper
Bookkeeping is essential since it tells the businessman his costs incurred and profit earned, the assets and liabilities that he has. Without it, the realization of overdue payments from debtors as well as outstanding payments for loans and bills would become immensely difficult to track. Also, tax filing would become a chaotic activity at the end of the year with a last-minute scramble for finding receipts and bills.
The thing that is of utmost importance in any business is that of its cash flow. Cash Flow statement is to be maintained in order to get timely payments from customers and use it thereafter to source supplies in a timely manner for attaining business objectives.
While the business plan is chalked out in the beginning or when it is required to be altered later, the businessman needs the financial statements and bookkeeping reports in order to assess the budget and its estimated expenses for achieving the stated objective of his business.
If you are a small business owner, there is a high chance that the entire bookkeeping function is done by you as a way to save money.
Doing this activity all by yourself might not be a good idea since it might lead to errors and then severe compounded errors each year leading to bankruptcy soon. You might be a great field operative running the business well but that doe not make you a bookkeeping expert, does it?
Do not make the mistake of thinking these as mere exaggerated statements. On the contrary, these are sheer hard facts since the most common reason for a company’s failure in its first 5 years of operations is ineffective monetary planning.
The importance of properly maintained financial records and the effectiveness in outsourcing the same to an expert bookkeeping service provider will be discussed below.
Firstly, for proper business planning, bookkeeping is a must since it enables you to see the direction your business is moving, identify the ventures which are paying off and some others that are becoming liabilities. It also facilitates the correction of problems when they arise in the first place.
Secondly, for tracking and organizing purposes, bookkeeping is a must. Hence, transaction tracking and invoice handling are all a lot easier for you during auditing activities, thanks to the subject called bookkeeping which keeps you away from the last-minute chaos.
For many countries, even 5-year-old invoices need to be archived and without a clean audit trail, dealing with the government can become quite a hellish experience.
Thirdly, remember that banks refuse any proposal for a loan or any extra funding requests without proper submission of bookkeeping reports and financial statements as a part of the approval process. If you fail to provide the same, your request would most certainly meet a refusal.
For you to get a clean exit while selling off your business, bookkeeping is of utmost importance since your prospective buyers would want to see the financials of at least the last few years of operation.
Lastly, tax filing, the most difficult task as termed by most businessmen will become a lot easier if your bookkeeping reports are well organized and updated.
Therefore, you can now concentrate on the tax burden reduction methods instead of complicated and confusing financial statements.
The importance of bookkeeping is too immense to dismiss and thus if a businessman is unable to undertake the same on his own, it should be outsourced to an external expert.
You can now save not only time but also money apart from being relaxed about your financial statements. They would most definitely be prim and proper now.