Advantages of Bookkeeping
By: Caliber Accounting Solutions
Tags: Accounting

Bookkeeping is the initial step in the accounting process and arguably the most significant one. A bookkeeper will compile all financial data — from transactions to wages — and turn them into easy-to-read reports that are prepared for future analysis. There are different advantages to having a good bookkeeper, and with all the changes happening in the financial world, every business will need to have such a person on staff.

Bookkeeping is a basic role that each business owner should be able to handle, and he should enlist the assistance of someone who can deal with this task if he cannot. You don’t need to hire an accountant or an in-house bookkeeper to do this for you. Numerous business owners outsource their bookkeeping needs instead.

1. Well kept records mean tax saving

Well kept accounting records act as a reminder of a person’s deductible credits and costs. It’s just by keeping the right records of business expenses that owners can proof various expenses that were incurred while carrying out business operations. By doing this, they are not compelled to rely on memory.

2. Detailed Recording

A thorough, dedicated bookkeeper will consistently keep detailed records up to date. This total recording will not only assist you in supervising your business accounts but will also be of great assistance once you need your financial statements — or once your company is audited — as this procedure will be much quicker and much cheaper.

3. Always Compliant with the Law

A good bookkeeper will consistently comply with the recent legal regulations and will make sure all your accounts and books are up to date with any recent legal changes. Because the bookkeeper holds himself or herself accountable for any work that they do, you can depend on them to clear any mistakes. This saves time and effort for the bookkeeper, which in turn saves money for the company.

4. It is Easier to Plan

When you have a detailed recording and a better overview of the company’s accounts, it is much simpler to plan and predict the future. When you are confident in your information, you can solve issues rapidly and you can grab any opportunities that present themselves, without having to fear miscalculations in the accessible data. Thanks to the overview of profit and loss evolutions in the balance sheet, you will have the option to know exactly what to do and how much time you have to do it.

5. Faster Business Response Time

When you have real-time data about the condition of your accounts, you will be able to react rapidly to any changes that happen to the market or your business. You will know the extent of your resources and current costs, providing you with accurate insight: is it the right time to act?

6. Instant Reporting

Even though you will need to wait for the accountant or the auditor to finish their reports to conclude official financial statements, you will always have an updated balance sheet to inquire about the current state of the accounts. You will be able to introduce these data to any interested party, giving extra confidence both in your work as a manager and in the company’s health as a whole.

7. Better Relations with Banks and Investors

That confidence will improve business relations with your investors and shareholders. Additionally, banks will be more willing to provide you with more affordable loans once they can see how your company is thriving. Any time an investor is interested in the strength of your company, you can simply show the current detailed sheets and prove that the company is making major success.

8. Better Tax Prediction

While Customs will request an official financial statement from your company for taxation, you will be able to predict the outcome more accurately if you have access to detailed balance sheets over time. With them, you can keep an eye out for trends in your company’s business and be more confident in the amount of taxes you will be expected to pay at the end of the fiscal year.

9. Faster Financial Analysis

As bookkeeping tends to be more affordable than accounting, it’s useful to realize that by having detailed records you will shorten the length of time an accountant will spend on analyzing your accounts and creating financial statements. This will not only reduce the expense of accounting but will also give you more time to act upon the data provided by the analysis and change any strategies you might have planned.

10. Easier Audits

Delivering financial statements is much easier and faster when you have a better data-recording model. You will have a much easier time conducting an audit than you would if your accounts are messy, disorganized or even slightly outdated. Any auditor you employ will just need to get the detailed balance sheets and compare them with the statements to know exactly what was finished. They can produce their report rapidly and any mistakes will float to the surface.

11. Better Decision Making

With analysis comes better decision making. To make the best decisions possible, you need to have access to all available information. Bookkeeping gives this information.