In simple language, bookkeeping is nothing but record keeping of all the incomes and the expenses of your company. Bookkeeping is an integral part of any modern-day business. No matter how big or small your business is or in which niche you specialize, bookkeeping is always helpful. Here’s why bookkeeping is crucial for your business.
Systematic Record Of Transactions
Bookkeeping is the best way to keep a track of the income from various sources and all expenses incurred by your firm. Timely bookkeeping helps in maintaining the record of the inflow and outflow of the cash that can be checked or viewed at any given point of time. Thus, it helps you monitor your cash flows. Also, you do not miss out making payments on time or collecting revenues from your debtors as and when they are due.
Timely Filing Of Tax Returns
We all know how tedious the entire process of filing your tax returns can be. Any delay in filing your tax returns can attract penalties. Bookkeeping helps to maintain all the financial records that can be easily produced during the annual tax filing. Therefore, with a proper bookkeeping system in place for your firm, you are sure to make tax payments on time. Moreover, you do not miss out on any tax benefits for which you are eligible. As a result, it allows you to save more when filing your taxes.
Reporting To Investors Is Easier
Your investors are the major stakeholders. If you have a well-maintained bookkeeping system in place, it helps them to analyze and understand the financial position of the company. Your books of account will give a fair picture about the operations of your company and how it is progressing. If your books of account are not in order, it becomes difficult for the investors to determine the firm’s performance. Hence, it’s best that you maintain your books of account so that it becomes easier for the investors to understand it and also allow you get more investments in the future.
Least Troubles During Submitting The Audits
Right from the small invoices to the bigger bills, everything is preserved and all the transactions are recorded. During the complete audit by the Canada Revenue Agency (CRA), you can easily present and submit the data from your books of account. The chances of facing penalties and/or sanctions for not being able to submit correct records during the audit is reduced. Furthermore, since all your transaction data is maintained, it becomes convenient to prepare for any financial audits.
Useful In Business Planning
Bookkeeping is useful to plan a future course of action for your firm. By analyzing your financial statements, you come know whether your business is performing efficiently and effectively. This can also be done by comparing previous years’ financial statements. For example, if you notice the cost of raw materials increasing over the years, you may consider purchasing it from other vendors or identify a cheaper substitute. Therefore, bookkeeping helps you to make smart business decisions.
Now that you know how helpful bookkeeping is for your business, you must start preparing your books of account. If you need any assistance in preparing your financial statement, consider outsourcing the entire responsibility to an expert bookkeeper Edmonton.