Whenever we think of starting any business, a lot of things strike in our mind related to business such as stock, products, services, finance management, bookkeeping and many more. If you keep everything aside and pick out the word ‘bookkeeping,’ it alone becomes a huge considerable factor for business management. Now the question which comes in our mind is “do I really need to do bookkeeping” or “why do I have to do bookkeeping.” Such questions become very important especially if you’re engaged in financial transactions, right. If you’re having this question as a doubt in your mind, then you’re spotted at the right place. In this article, I will talk about why is it important for you to do bookkeeping for your business. Make sure you read the article till the end.
I will start from the basics here. Let’s now dig in.
What bookkeeping is?
In simple words, bookkeeping is the process of recording financial transactions, accounting practices, and any money related matter of a company. In other words, it records day-to-day financial transaction (if happens) of the company. Additionally, it ensures that records of the individual financial transactions are correct, up-to-date, and comprehensive. It basically provides the information from which accounts are prepared.
Tasks involved in bookkeeping are:
✤ Creating general financial reports
✤ Loan payments
✤ Expense payments to suppliers
✤ Customer payment for invoices
✤ Monitoring asset depreciation
Does bookkeeping really matter?
Believe it or not, if you’re into digital marketing, bookkeeping matters a lot. A thorough bookkeeping is crucial for businesses of all sizes. In more straightforward way, it significantly becomes more complex and rigid with the introduction of taxes, loans, assets, and investments. The main purpose of it is to track financial activities of a business through which you maintain an up-to-date report of the current incoming and outgoing amounts owned by business, customers, and more.
Let’s now dig deeper.
Why you need to do bookkeeping?
You have already read the concept of bookkeeping and why does it matter in your business. Now the main question which is hovering in your mind is “why do I have to do bookkeeping” will solve here. I am going to enlist some importance below, which is the answer to this question. Now have a look.
Importance of bookkeeping:
– It helps maintain budget
If you find managing budget is a hectic task then with the help of bookkeeping, you can effectively manage your business’ finance and budget without wasting a single penny. Don’t forget that when your income and expenses are properly organized, it makes it easier to review financial resources and expenses. Moreover, a budget creates a fine roadmap for your business. You can even plan for future expenses and the anticipated resources.
– Better decision making
Another advantage you have is better decision making. Tell me without preparing financial reports; can you make a better decision for future expenses of your business? Of course no. But with bookkeeping, it is possible. It provides you information so that you can have access to all the information.
– Financial management of the business
Next way bookkeeping helps you in business is by allowing you to manage business finance. You can easily take control of your business’ finances. It actually shows you a picture of how you spend money. No doubt, you will have complete benefit of paying bills on time, receiving payments from customers, and more. The dedicated balance of cash inflow and outflow will keep your business going.
– More focus on making strategy
Who doesn’t want to make strategy for their business? Without planning or strategy, nothing is possible. You just can’t think of going with the flow especially in business, right. As a business, you always think of plenty of ways to grow and develop your business. Use it as a tool so that you come closer to your short and long term goals.
– Provides you better cash flow
Marinating cash flow of any business is as important as spending. Without having proper cash flow record, you won’t be able to know how much money you have invested. Therefore, bookkeeping helps you prepare and maintain better cash flow of your business. It records revenue, expenses, liabilities, and receivables, to track every financial record of your business.
The bottom line
Bookkeeping is the significant part of your business only if you exercise it properly. You just can’t ignore it otherwise you won’t be able to know the income, expenses, revenue, and cash flow of your business. Now I hope you know why you need to do bookkeeping of your business, right. In case, you have any query related to bookkeeping then you can get in touch with us.