Why is bookkeeping important?
What does bookkeeping entail and why is it crucial for your business?
Here at Hartley Fowler, we provide our clients with a comprehensive range of accounting services including bookkeeping.
Our experienced accountants offer bookkeeping services to a range of businesses, from smaller startups to more established enterprises. By maintaining precise and current financial records, we give you the opportunity to make informed decisions that will nurture your business both in the short term and into the future.
Bookkeeping has a significant and pivotal role in your business. In this article we will explore some of the most frequently asked questions, including:
- How does bookkeeping work and what does it entail?
- Why is bookkeeping important for your business?
- And why outsource bookkeeping to an accountant
What does bookkeeping entail?
Bookkeeping involves systematically recording details of financial transactions relating to a business or other organisation. This includes:
- Sales made
- Invoices either issued or received
- Expenses incurred
- Payments to suppliers
- Employee salaries
Components of bookkeeping include:
Chart of accounts
Details of financial transactions are recorded as a structured chart of accounts. This categorises things like cash, accounts receivable and accounts payable, inventory, assets, liabilities and expenses.
It is important to match the transactions recorded in your books with the company bank statements. Any discrepancies between the two should be highlighted and investigated.
This is a central record of all financial transactions. It is organised chronologically and by account to act as a complete record of your business activities.
This ledger is an optional extra which gives you the opportunity to hold details for certain accounts in order to track something specific, e.g. customer and vendor transactions.
Income statements, balance sheets and cash flow statements provide an overview of your business’s performance and position.
Compiling reliable financial data – monthly, quarterly or annually – provides insight to better monitor your business’s financial health and predict future performance.
Accurately maintained books also ensure compliance with tax regulations and reporting requirements, such as filing accurate tax returns and facilitating audits.
Well-maintained books also facilitate internal and external auditing processes, as well as financial analysis. It enables business owners, investors, and stakeholders to make informed decisions based on reliable financial data.
With all of this in mind, bookkeeping can be a very time-consuming activity which requires accuracy and efficiency.
Why is bookkeeping important?
The main goal of bookkeeping is to maintain an up-to-date view of the company’s financial health. Bookkeeping is important because it provides:
- A record of your organisation’s financial health and the ability to track and predict profitability
- An accurate basis for creating tax reports – failure to comply with regulations may result in penalties and fines
- Help in securing financing and potentially attracting investors
- A framework to manage cash flow effectively and maintain adequate working capital
- Clarity to assist in fiscal planning and informed decision-making
Why outsource bookkeeping to an accountant?
Outsourcing your bookkeeping requirements to a reputable accountant offers many compelling benefits. Here are 6 reasons why you should outsource bookkeeping:
Accounting professionals offer a wealth of knowledge and expertise in financial management as well as associated tax regulations. When you outsource bookkeeping to one of our accountants, you can rest assured that your financial records will be kept accurate, compliant and up-to-date.
2. Saving Time
Bookkeeping is time-consuming – particularly if you’re unfamiliar with the process and what’s required. Outsourcing your bookkeeping requirements to an expert allows you to focus on running and growing your business.
3. Cost-Effective and Scalable
Outsourcing bookkeeping to a professional means that you only need to pay for services when you need them. Our flexible accountants can scale their services to meet your ever-changing needs.
4. Accurate and Compliant
Most accountants use sophisticated specialist accounting software which increases accuracy and the speed of processing data. In turn, this improves reporting capability and minimises the risk of errors. It ensures that your financial reports are compliant with relevant laws and regulations.
Having access to detailed financial information enables you to forecast performance, make informed decisions, invest wisely and plan strategically for future growth.
6. Improved Business Performance
Freeing up time from your operational burden enables you to focus on your core activities and customer service. This means that you’re more likely to enjoy better business performance.
Why choose us – bookkeeping and beyond
As discussed, effective bookkeeping is the bedrock of financial management for businesses of any size. From legal compliance to informed decision-making, bookkeeping plays an integral role in ensuring the long-term success of your company or organisation.
As experienced accountants, we understand the true value of robust bookkeeping. With the insight of accurate bookkeeping records, we provide analysis and proactive advice to support business expansion and help you to thrive.