What is Bookkeeping?
Bookkeeping is the process of recording and organizing financial data on a regular basis. This could be for an individual, business, or any other type of organization. It ensures that financial information is comprehensive, up to date, and accessible.
Important small business bookkeeping accounts:
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Bookkeeping includes activities like: -
Recording sales and tracking invoices.
Monitoring Accounts receivable.
Verifying and recording invoices from suppliers.
Paying supplier invoices.
Billing clients for goods sold or services provided.
Prepare financial statements.
Manage bank feeds.
Reconcile your bank accounts etc.
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Why Bookkeeping is Important?
Tracking revenues, expenses, assets, and liabilities is a fundamental part of running a successful business. The right tools for accounting and bookkeeping can increase efficiency, help your clients better manage cash flow, and make tax time easier. Here are a few to consider.
Bookkeeping is important because it helps you budget. When income and expenses are properly organized, it makes it easier to review financial resources and expenses.
With a bookkeeping process in place, you can have financial information ready for tax time. Instead of scrambling for receipts or invoices, all of your financial information is organized on one central system.
Bookkeeping is the organization of financial information. Keeping your financial records organized makes it easier to locate and provide to appropriate parties.
Bookkeeping is important because it helps with business analysis. It is a tool used by management to analyze business performance. While analyzing financial statement, you can track your cash inflows and outflows.
Bookkeeping helps with analysis and with analysis comes better decision making. In order to make the best decisions possible, you need to have access to all available information, and bookkeeping provides this information.
Bookkeeping presents the past financial performance of your company. In order to plan for the future, you have to have a good understanding of the past. Bookkeeping will give you the clear picture of what exactly works or doesn’t work.
Bookkeeping is important because it allows you to take control of your business’ finances. Bookkeeping paints a clear picture of how you spend money. You can see outstanding invoices owed by you or your customers. You will benefit from paying your bills on time and receiving payment for your products or services on time too.
Bookkeeping is important because it shows your business’ profitability. Bookkeeping also helps with tracking growth.
Bookkeeping improves your cash flow. The routine recording of revenues, expenses, liabilities, and receivables, will allow you to track when your customer and vendor invoices are paid. Because bookkeeping provides information regarding your outstanding invoices – customer/vendor name, amount, date issued and due date – which can be used to implement better cash flow policies.
Bookkeeping provides financial information about your company in the form of financial statements. Financial statements like the balance sheet, income statement, and cash flow statement all provide financial information for a set period of time. Together these statements take a snapshot of your business allowing you the ability to see how well your business performed.
Disorganized books can weigh heavy on your mind as a business owner. With all of the other factors of running a business, your bookkeeping should not be keeping you up at night. When your books are complete, you can rest easy knowing that your company’s financial information is review ready.
HTH & Associates help organizations and business owners with accounting and/or financial consulting services.
If you have questions about book keeping, contact us at firstname.lastname@example.org or call us at 909-599-2111.
Thanks for reading and good bye for now until we meet again.
Sapna Agnihotri, is an Accounting and Human Resources Intern at Thaddeus Resource Center. Prior to Joining Thaddeus Resource Center, she worked as a teacher. A graduate in Family Finance and Consumer Science, she studied Accounting from Waukesha Technical College, and lives in Wisconsin.