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Bookkeeping, Entrepreneurship, SME Knowledge

What is Bookkeeping? Importance of Bookkeeping activities.

Bookkeeping

Bookkeeping is the important task of keeping records of financial transactions and it is the essential part of accounting in all the business operations. It is such an important activity that decides your business strength. It is the activity of Classifying, Reporting and Analyzing data. Without proper bookkeeping, it’s impossible to run your business and you may wind up with unexpected challenges and outcomes.

 

“How Bookkeeping helps you in managing and growing a business?”

  1. Bookkeeping works under the concept of double entry system, recording financial transactions under credits and debits heads.
  2. Debits represent an asset and Credits represent a liability. Debit will increase the value of an asset and credit will reduce its value.

Initially bookkeeping may confuse you a little bit, but the fact is, it’s very simple once you understand the strategy of financial transactions, Debits, Credits and Equity.

  1. Assets are economic resources a company owns, such as cash, inventory, buildings, equipment, vehicles etc.
  2. Liabilities include loans payable, bonds payable, interest payable, wages payable, and income taxes payable. Less common liabilities are customer deposits and deferred revenues.
  3. Equity is the value of an asset less the value of all liabilities on that asset.

Entrepreneurs or small & medium business owners can do their bookkeeping all alone and understand their company net worth and control the finance. Many of them move their entire bookkeeping process to bookkeepers OR Chartered Accountants to maintain their bookkeeping service that will save their precious time but the possibility of making financial mistakes and a-lot more.

Bookkeeping for medium & large organizations that have traditional hierarchy in organisations with multi level operations maintain a large accounting department, with immense capital investments, secure infrastructure as well as maintain quality audits.

By recording day-to-day financial details you can keep track of data that will help you to maintain the accurate records of financial entries.

Organization’s spending and revenue and expenditure, cash flow, budgets, ledgers, Bank & Credit Card Reconciliation, Journals, Inventory Management, Sales Tax and VAT Management, Accounts Receivables and Payables, Income Tax records, Costing & Budgeting, monthly, quarterly and yearly closing financial statements, etc can be recorded accurately up to date. When bookkeeping maintains accuracy in day to day financial activities, it gives you an excellent benchmark of how well your business is performing.  It also provides financial information throughout the year so you can test the success of your business strategies and make required changes in the system to ensure that you reach your year-end profit goals.

 

Professionals; Bookkeeping Advantages.

  • Maintaining all general ledger accounts in real time.
  • Preparing invoices, cheques, bank reconciliations and completing financial statements.
  • Reconstructing essential data from historical records when needed.
  • Backup your important electronic records day to day, available to take when required.
  • Excellent staffing – accounting is no longer part maintenance work for somebody who could be better utilized on your staff
  • Keep your active financial records off-site and assure total confidentiality.
  • (OR) Keeping proper business records required by law
  • Bookkeeping helps you track on all activities and documents in order to do annual taxes, without rushing to find bills and expenses when time pay tax. Same time help you to understand the financial accounts (Cash Flow Statement, Profit and Loss & Balance-sheet)
  • Same time reporting investors is also easy with perfect documentation
  • Be more profitable by saving your time from routine tasks to focus on business strategies.

Bookkeeping is a fixed to its quality policy brings accurate business process that benefit to businesses further leading efficiency, productivity in a convenient style.

Nityananda Rao, (BE, PGDGM and INSEAD Alumnus), is the CEO of AcTouch Technologies with 20+ years of experience in ERP, Banking and Treasury Solutions. He is a Mechanical engineer who worked on shop-floor with CNC Machines, SP-300 like Injection Moulding machines. He is a authority on ERP and it's features. Prior to starting AcTouch Tech, he worked with Infosys, Misys, Murex etc managing APAC region as profit centre.

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