The end of financial year is dreaded for a lot of individuals and businesses alike. There is a lot of consolidation and reconciliation of everything that happened in the last 365 days and if you are not a highly organised person or even if you are just a very busy individual who has no time to consolidate it all, it can easily become a nightmare. This is when bookkeeping comes in handy. It is basically the recording of financial transactions which may include sales, payments, expenses, and purchases. It includes all cash transactions; accounts receivables which is money already due from your customers; inventory count/cost which is the actual product you sell; accounts payable or money that is owed to you; loans; sales/invoices which is the revenue earned from the sale of inventory; purchases or the cost of materials or goods that you buy for the business; and payroll which is the amount you pay your staff. These may already seem a lot but this is not the extent of it. So you can see how tricky it may get especially if your business is growing or your financial transactions are multiplying.
It may be tedious but bookkeeping should not be set aside. It is a highly crucial part of the accounting process because preparation of source documents is needed for the accountant to know how much you need to pay for taxes and how much you are eligible to claim for tax returns. If your balance sheet and cash flow tables are up to date via bookkeeping, if you ever hire an accountant to do your taxes, he or she can allocate more time into assessing your tax situation rather than correcting your financial statements.
Bookkeeping also helps you keep track of invoices and payments. It may seem menial to record every single thing at first but once business picks up or your financial transactions multiply, it is easy to lose track and fumble with all the documents especially on those invoices that need follow-ups or those that you need to pay soon. Thus, bookkeeping helps systematise everything according to date so you know which ones need immediate action. There are lots of modern techniques and programs such as Ostendo that can help you perform your bookkeeping duties. If you are unsure about what Ostendo is or how to use it to the full potential, then take a look here to learn about the capabilities and advice regarding Ostendo.
If you have your own business as well, bookkeeping will work on your favour when it comes to your business planning. Having your balance sheet updated will let you know if you are staying afloat and point out which parts of your business is performing well. It would also be easy to pinpoint parts that you may have to reduce or cutback in the business operations. In addition, if you have intentions of bringing in more investors – having your books ready and updated will give the impression that you have your process together to your potential investors. And if you already do have investors, bookkeeping will help you efficiently report the company’s financial status. If you are in need of external bookkeeping services or support then you can always contact specialised book keepers such as the ones found here. A bookkeeping company such as Two Peas will provide you with all the bookkeeping advice and solutions you need to grow your business.
Bookkeeping is indeed important. If you are the type of person who wants to handle your books yourself then fortunately for you there is already a lot of amazing software available in the market that digitises the process for you. They have even altered the interface of their software to make it user-friendly even for people who have no background in accounting. You simply input everything you do in your business or in your personal life and the software will record it for you for easy access whenever you need it.