A famous author and businessman Robert Kiyosaki once said “The term accounting comes from the accountability. If you are going to be rich, then you need to be accountable for your money”. This means if you are running an organisation, then you must give importance to accounting and bookkeeping.
According to the recent survey, 60% of the small and medium-sized businesses fail due to lack of bookkeeping than any other thing. How is that possible? As you are doing everything except the bookkeeping so how it is pushing your business to the point where it crumbles to dust? Well, here are some to justify the answer.
Bookkeeping is the Backbone of Your Business
A well- maintained bookkeeping system keeps a track of the assets, liabilities, profits and all of the other financial transactions that are taking place in the organization. These transactions incorporate, debtors, creditors, legal expenses, tax liabilities, the cost of goods and services. On the basis of the records, the senior management can take necessary decisions to cut down expenditures on the essential activities. Without having the proper information, management will be aiming in the dark not knowing what are their business goals and objectives and where they are financially standing in the market. You can hire an accounting assignment writing help to know more about the preparation of financial records.
You Cannot Totally Over Auditors to Run Your Business
The most misconception, small business owners have is all they need to do is hire an accounting firm to handle annual tax preparation and there are done with the accounting part. In reality, they are far from being done with the accounting part. Even though, tax prepares track your annual profit, losses and tax liabilities.
However, calculating taxes doesn’t cover all the aspects of accounting. For example; an accountant who updates day-to-day transaction in the bookkeeping has every single detail about the daily transactions that come handy during expenditure planning, income forecasting, deal analysis and more. Students who have previously prepared an assignment with Book Keeping assignment writing may be aware of this point.
Bookkeeping Keep the Track of the Tax Liability
As mentioned in the above point, your tax prepare can only keep the track of your tax liabilities, the rest of it still up to you. In concise term, you are responsible for gathering, analysing, evaluating and organise to determine your tax liabilities and keep the track of payments and receipts.
It Takes Your Business Toward the Growth
Many small businesses prefer to use the cash-basis system to keep a record of their financial transactions. The system is easy to maintain as it only considers transactions as cash in hand. In more precise words, you only keep tracks of the transactions that you own as you pay in cash. While as simple as it seems, there a major disadvantage of using this system – it doesn’t reflect real assets or liabilities.
These are some of the reasons why it is necessary to have a bookkeeping system as a part of your small business.
Bookkeeping is necessary to maintain clear and concise financial records still many businesses fail to implement this internal process. In the below article, you will explore the necessity of having an effective bookkeeping system for small businesses. Students can avail top-class academic assignment writing help service from BookMyEssay online assignment writer at the reliable cost.