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Importance of Bookkeeping

1) Keeping accurate financial records through bookkeeping is important for monitoring a business's performance, making informed decisions, obtaining financing, and meeting tax obligations. 2) Without proper bookkeeping, a business owner will not have the necessary financial information to evaluate how their business is doing, understand the financial impact of decisions, or provide documentation required for loans or investors. 3) Maintaining strong bookkeeping helps business owners prepare budgets, financial statements, tax returns accurately and on time, avoid penalties, and distribute profits correctly. Hiring a bookkeeper can help business owners focus on their core operations instead of record keeping.

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Felippe Queiroz
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© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
30 views

Importance of Bookkeeping

1) Keeping accurate financial records through bookkeeping is important for monitoring a business's performance, making informed decisions, obtaining financing, and meeting tax obligations. 2) Without proper bookkeeping, a business owner will not have the necessary financial information to evaluate how their business is doing, understand the financial impact of decisions, or provide documentation required for loans or investors. 3) Maintaining strong bookkeeping helps business owners prepare budgets, financial statements, tax returns accurately and on time, avoid penalties, and distribute profits correctly. Hiring a bookkeeper can help business owners focus on their core operations instead of record keeping.

Uploaded by

Felippe Queiroz
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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IMPORTANCE OF

BOOKKEEPING
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Are your receipts in a shoebox?
Too busy to keep up with your bookkeeping? Do you
continually analyze the success, failure and progress of
your business?

How liquid is your business?


Does it have enough current assets to meet current
debts? What is your turnover for inventory?
receivables?

Are you going to run a successful business, you might


have accurate and timely financial information.
reasons to have a good record keeping system:

MONITORING It's hard to know how your business is doing without a clear
financial picture. Am I making money? Are sales increasing?
YOUR BUSINESS
Are expenses increasing faster than sales? Which expenses
are too high based on my level of sales? Do some appear to
be "out of control?"

PROVIDING Evaluating financial consequences should


INFORMATION
be a part pf every business decision you
make.

DECISION Without accurate records and financial information, it might


MAKING be hard for you to know the financial impact of a given course
of action. Will it pay to hire another person? How much will
another employee cost? Is this particular product profitable?
Obtaining bank financing?
A banker will usually want to see financial statements: a
balance sheet, income statements, and cash flow budget
for the most current and prior years, as well your projected
statements showing the impact of the requested loan

A banker might even want to see some of your


bookkeeping procedures and documents to verify whether
you run your business in a sound, professional manner.

If your business has reached the point where you need to


take in a partner , any prospective partner will want to
become intimately with your financial picture.
Obtaining other sources of capital

If you need capital and are thinking of taking in an outside investor, you will need to
produce a lot of financial information. Even your suppliers and other creditors may ask to
see certain financial records. Such information might be produced by your outside
accountant, but its based on your day-to-day record keeping
ITEM 1
Item 4 Item 1
25% 25% All business should use a
budget for planning purposes.
ITEM 2

budgeting
A budget will keep your business on track by
forecasting your cash needs and helping you
control expenditures
ITEM 3

In addition, if you're seeking bank finance or


other sources of capital, a banker or prospective
investor will probably want to see...
ITEM 4

your budget as evidence that your business is


Item 3 Item 2
well planned and stable. You must have a solid
25% 25%
financial information to prepare a meaningful
budget.
Preparing your income tax returns

Whether your business With good records, Poor records may result in your
is a sole proprietorship, underpaying or overpaying your
preparing an
taxes and/or filling late (and
partnership, or accurate tax return paying penalties). If your
corporation, you must will be easier and accountant prepares you income
file and income tax tax returns, poor records will
you're more likely to
return and pay income almost certainly result in your
be able to do it on
taxes. paying high accounting fees.
time.
If your business is a partnership...

not only will you have to prepare a partnership tax returns,


but partnership returns amounts will pass directly to the tax
returns of each partner. So your recordkeeping will directly
affect the tax return of each partner.
Complying with federal and state payroll
tax rules.
If you have employees you are aware of the Myriad rules and

1
relations relating to the payroll taxes payroll tax deposits must
be made according to street that lines late payments of payroll
taxes results in severe and unnecessary penalties

Also you must file a payroll tax return and recorder which must

2 reconcile with the payroll deposits made during the quarter then
at the end of the year you are required to give your employees
and the government W2 forms which must agree with your
quarterly payroll returns

3 Sound bookkeeping practices will make compliance with all


these payroll rules easy. Poor records will make it
impossible
Distributing profits
If your business is a partnership you
will need good record to determine
the correct amount of profits to
distribute to each partner

if you're operating as a corporation


you must determine the company's
profits that you will be paying out as
dividends to the shareholders
Unless your business is accounting or bookkeeping,
keeping Financial records is probably not what you
do best.

You would rather spend your time selling your


product or service.

To eliminate the stress, mishaps and potential errors


in your financial records, hire a bookkeeper to keep
your books!

Drop off your receipts and financial data every week


received the monthly statements and reports needed
to know how your business is doing.
Services provided into your software platform

1 General ledger maintenance 5 Chart of Accounts Setup

2 Payables and Receivables


management 6 Monthly-end closing

3 Bank Reconciliation 7 Budgeting

4 Payroll processing
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