What is Bookkeeping? Importance of Bookkeeping activities.
What is bookkeeping? How it is important in the business segment? Bookkeeping is an important task of keeping Financial records and it’s transactions. 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.
DIFFERENCES BETWEEN BOOKKEEPING AND ACCOUNTING:
Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business. Transactions include purchases, sales, receipts, and payments by an individual person or an organization/corporation. There are several standard methods of bookkeeping, including the single-entry and double-entry bookkeeping systems.
Accounting or accountancy is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations.
Types of Bookkeeping systems:
– Single-Entry system
– Double-Entry system
Importance of Bookkeeping in Business.
“How Bookkeeping helps you in managing and growing a business?”
- Bookkeeping works under the concept of double entry system, recording financial transactions under credits and debits heads.
- 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.
- Assets are economic resources a company owns, such as cash, inventory, buildings, equipment, vehicles etc.
- Liabilities include loans payable, bonds payable, interest payable, wages payable, and income taxes payable. Less common liabilities are customer deposits and deferred revenues.
- 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 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.
Organisation’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.
How ACTouch.com can help Bookkeeping and Accounting Community?
Questions to the Bookkeeping Community
- How many customers you manage every month? If its more 25 customers then you can save Money and Time.
- How many invoices and Bills entered manually by you? (Based on our experience, each customer on average could generate around 200 documents per month. This means, bookkeeper has to enter nearly 5000 documents and it takes time.
- Is your customers follow a process of sending the documents every week? If not, then you are dumped with all the documents between 25th of every month. Right?
- Does your customer use any software? If not, they are also struggling with the entry of Invoices and Bills, maintaining them, clearing them as the money is received.
To reduce the burden, we launched our new Mobile Apps, “Dhandha” on Google Playstore.
How it helps you and your Business friends?
- Its 100% free. Click here to download into your Android MobileApps
- Your Customers / Business Friends can create Invoice, Bills and track Payments and Receipts.
- At the month end, they can send these details in an EXCEL file to you. You can upload these data into your accounting software. Done.
We tested the Interface with sample customer base and nearly 1000 records are uploaded in 3 min into Tally Software.
Today there are 1000’s of Business owners have downloaded and started using the Apps. We have interfaced to TALLY Software.