Bookkeeping is one of the most profitable occupations on the planet. This is because every organization, no matter its size, requires the services of a bookkeeper to keep its finances under control. Besides this, a weak bookkeeping system can be dangerous for a company. For this reason, earning a certification from the International Association of Bookkeepers (IAB) can make you a very desirable prospect for companies looking for a competent bookkeeper. Before we go into the article see here for more information about bookkeeping services.
That said, here are 5 reasons why commercial bookkeeping is important:
1.Ensures Fulfilment of Tax Responsibilities
Normally, bookkeeping guarantees that all-important financial records, incomings, and outgoings are accurately maintained. These records make it easy for tax agents to file tax returns. On the other hand, it can be quite hard to complete a proper tax return without accurate bookkeeping throughout the year.
Remember, incorrect returns could mean the company overpays, putting strain on cash flow. Besides this, improper bookkeeping could cause the firm to underpay, resulting in fines or penalties. Additionally, VAT-registered enterprises must also submit a VAT return every few months showing the VAT charged and paid. Luckily, proper bookkeeping helps meet these requirements.
2.Helps to Fulfil Statutory Obligations
Businesses are required to do more than filing tax and VAT returns. This is because they must also keep track of their finances so that HMRC can examine them at any time. The inspection is meant to ensure that the company is paying the correct amount of tax, wages, and NI contributions. That said, it is the bookkeeper’s responsibility to keep all of these files up to date. More importantly, every significant transaction must be properly recorded to avoid discrepancies with previously filed tax returns.
3.Essential for Better Financial Analysis and Running of a Business
Bookkeeping is more than just keeping financial records as it also entails analyzing them. To keep paying employees and suppliers, any business must maintain a strong cash flow. Failure to do so could prohibit the firm from operating normally, resulting in lost revenue. Unfortunately, in more serious cases, unhealthy cash flow levels can lead to a company’s dissolution. Therefore, it is the bookkeeper’s job to keep an eye on the company’s finances to guarantee that cash flow is healthy and the company stays stable.
4.Assists in the Development of Business Strategies
A bookkeeper’s assessment of a firm’s finances will aid in the development of the overall business plan, as well as provide sensible advice to the stockholders. In addition, existing financial records will impact expansion, investing, and budgeting plans. Therefore, as a bookkeeper, you may be asked for advice regularly by company executives. Because successful business planning requires a complete analysis of financial data, bookkeeping is an essential element of corporate growth.
5.Helps to Attract Investors
Many businesses rely significantly on financiers to help them expand and succeed. However, these investors must be confident that their money is being invested wisely. Luckily, with rigorous bookkeeping, investors can get thorough reports regarding the company’s financial status. Consequently, this gives them confidence in their investment.
Further, when contacting possible new investors, the company will be expected to give financial data to show that it is financially stable. As a result, good bookkeeping can assist in attracting new investors.
Wind Up
The importance of proper bookkeeping cannot be overstated. This is because it is a crucial part of any business that wants to thrive. As such, every organization should hire a competent bookkeeper!