Bookkeeping refers to the process of recording the day-to-day financial transactions of the business into recognized accounts. It involves recording receipts from customers, billing for goods and services sold, recording payments made to suppliers and other payables. Commonly used bookkeeping techniques for SMEs include single-entry and double-entry.
For any SME or StartUp to prosper and experience maximum profits and minimize losses, bookkeeping is very crucial for the business. The importance of bookkeeping to these businesses include;
Proper organization of Business records
Bookkeeping helps the SME to record the day-to-day transactions of the business. This will include recording receipts from customers, recording payments made to suppliers and even recording invoices from suppliers. This will help generate accurate financial statements for the business.
Prepares the Business for Tax
Bookkeeping helps the SME and StartUps have all the financial information and records ready for tax season For instance when the financial statements for the business is required for tax purpose, they can be easily be generated with accurate information to avoid penalties or any other negative repercussions to the business.
Accuracy in Budgeting
Bookkeeping helps to generate financial reports which show the current financial position of the business in terms of income and debt. With this information on income and debt, the management and stakeholders can make sound decisions as far as budgeting is concerned, for instance by trying to offset the business debt pool and maintaining a sustainable operational income for a certain period of time.
Accuracy in Debt collection
Bookkeeping will help achieve this by generating detailed invoices to various customers who have purchased goods or services from businesses requiring them to make their payments.
Helps in Time Management
Bookkeeping helps the SME and StartUps record all the day-to-day financial transactions of the business to various organized accounts. With this, it will be easier for the owner or the persons responsible for decision-making within the business to quickly recognize any account, for instance, an expense account that will require an urgent action at any particular time. This will help the business save time and while increasing productivity.
Helps the Business to meet its set goals
Proper bookkeeping helps SMEs and StartUps to meet their set goals or objectives either in the short or long term. This is because, with proper financial records of the business, it will be easier to gauge whether the business is maximizing profits or recording losses over a specified period of time and taking necessary actions to change the trend.
Helps to Improve Cash flow management
Bookkeeping helps the SME to improve cash flow management by efficiently tracking both income and expenses. This will include closely monitoring the cash moving in and out of the business and the total amount the business owes to various payables.
For SME or StartUps to maximize on profits and minimize losses bookkeeping practices should be made a priority. When it comes to matters dealing with bookkeeping for SME and other SME accounting services, then Ronald LLP should be your first destination. We have a team of experts with vast experience in bookkeeping practices such as reconciliation of cash and bank accounts, maintaining payable and receivables records, managing payrolls, recording all business transaction, preparation of financial reports and statements and filling of business returns.
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