Why is Bookkeeping Essential to Growing Small Business?

Learning reliable and secure bookkeeping systems is impeccable for running a small business. With up-to-date bookkeeping, entrepreneurs will be able to manage deposits, credit, invoicing, cash-to-cash cycles, and other myriads of daily financial tasks. Sorting out bookkeeping and record-keeping systems according to Australian Accounting Standards will always give business owners a better picture of business finances.

 

What is Bookkeeping?

Basically, bookkeeping is recording the financial transaction of the company on a regular basis. When the bookkeeping is done properly, companies can reliably measure their performance in the market. It also presents information on general strategic decisions and gives a benchmark for its revenue and income goals. Hiring a reliable bookkeeper for your small business would be a good idea to save valuable time and money. When small businesses rely on their consultants or employees to maintain their books, usually they find it difficult to comprehend the important details of their business expenses, losses, and investing transactions. If your goal is to run your small business efficiently or grow your business, bookkeeping helps run your payroll and invoicing and expose your cash position at the tap of a button.

 

Why is Bookkeeping Essential?

Many people who intend to start a new business venture sometimes overlook the need of recording the financial transaction of every penny. This should not be the case for the businesses that actually desire to grow over time. Since bookkeeping plays a key role to grow the business it is definitely worth investing in. So therefore, some of the benefits of bookkeeping are:

 

• Managing Accounts: Whether you own a restaurant, retail business, or sole trader, all financial transactions need to be managed on a regular basis to keep a track of cash flow.

 

• Maintaining Records: Gathering the essential invoices, payments, and transactional slips to maintain the up-to-date records of the business to resolve inconsistencies between books and accounts.

 

• Taxation: A reliable and trusted bookkeeper will assist the tax agent or accountant to file the taxes as per the laws and regulations by preventing you from paying any extra fines and makes your records consistent and accurate.

 

• Preparation of Financial Statements: The bookkeepers will help business owners to prepare their financial statements such as balance sheets, profit and loss statements, and cash flow statements. These financial statements present the business bottom line, the balance of assets, and operating expenses.

 

What Are Bookkeeping Systems?

For recording financial transactions and activities that happen in the business, bookkeeping systems are technically designed as ”Single-Entry System and ”Double-Entry System” with a set of defined rules.

• Single-Entry Bookkeeping System If your business does a minimal or uncomplicated financial transaction, the single-entry bookkeeping system will work for you. This system records when the cash sales and business expenses are paid. However, the bookkeeping entries in this system don’t care to match the transaction to corresponding accounts, which makes it difficult for business owners to trace revenues and expenses.
• Double Entry Bookkeeping System When accounting transactions start influencing the company’s finances in two ways, a double-entry bookkeeping system comes into the picture. The general ledger of the double-entry bookkeeping system records two sides of the transaction in the form of credit and debit;

• Purchases Inventory on Credit Debit Credit
• Items Inventory (Assets) Amount Payable (Liabilities)

 

Let’s say, an e-commerce company purchases $100 worth of inventory on credit. In this scenario, the Assets, (the inventory account) increases by $100, but the liabilities (the amount payable on credit) increase by $100. Here, this transaction will be reflected as the crediting accounts payable and debiting inventory in the books of account. A sheet is balanced as the assets of the company equal the equity and liability.

 

Tired of handling your accounting and bookkeeping while growing your business?

A professional and reliable bookkeeping service will help you relish the benefits of operating a business. After all, an expert bookkeeper knows exactly what needs to be done to track the financial transactions by setting up rules for how the accounts interact.

Shrink your financial problems and make an appointment to know more about bookkeeping packages for small businesses with a trusted partner like Aone Account & Bookkeeping. Get help and understanding today! Call us on 02 4555 1847 or email us at support@aoneaccount.com.