What is included in bookkeeping? and how it helps a business?
4 Min Read
Jan 28, 2023
Accounting & Bookkeeping
Let us explain what is included in bookkeeping and how it helps you manage your business.
Bookkeeping is the process of organising, analysing, and preserving a company’s financial records. It entails recording transactions and preserving financial documents to manage an organisation’s overall finances. Chartered accountants offer a wide range of accounting and bookkeeping services. Bookkeeping is not just for tracking your company’s financial position but also for regulatory compliance. The majority of firms employ electronic bookkeeping, whether it’s a spreadsheet or complicated software.
What do bookkeepers do?
A bookkeeper will help your business function effectively by doing the following tasks:
1) Maintain a record of daily transactions
A bookkeeper is in charge of recording daily bank transactions. If your accounting software supports daily automatic bank feeds, this is an invaluable method for your bookkeeper. It’s much simpler to keep track of cash flow when your bank statement lines are fed into your accounting software, and it also saves so much time on data entry.
2) Manage invoicing & monitoring of the accounts receivable ledger
The bookkeeper is in charge of generating invoices and sending them to clients. Furthermore, supervise the accounts receivable ledger and chase down late payments.
3) Take good care of the accounts payable ledger
Typically, bookkeepers will make payments on the company’s behalf up to a specific amount. Payment of supplier invoices, costs, and petty cash are all included.
4) Keep a close watch on cash flow
One of the most crucial responsibilities of a bookkeeper is to ensure that the firm does not run out of money daily. They can accomplish this by keeping track of the revenue-to-expense ratio. If it appears that the firm requires more ready cash, they might take action or offer suggestions.
5) Get the books ready for the accountant
The bookkeeper must make certain that the accounts are valid and updated when the accountant requires them. Also, enables the accountant to make commercial recommendations, report to the board, and submit company tax filings. Although accounting & finance management is not included in bookkeeping, many professional bookkeepers can do the accounting part as well.
Why is bookkeeping important for businesses?
Effective bookkeeping allows you to keep accurate financial records needed by law for tax purposes. Aside from being a legal requirement, proper bookkeeping provides real company benefits. The following are some of the reasons why efficient bookkeeping is vital for a successful business:
Helps control budget:
When income and expenses are recorded, it is easier to examine your financial resources and anticipate cash flow.
Bookkeeping is essential for people interested in your financial records, such as the IRS, creditors, accountants, and lenders. When your documents are structured properly, it is simpler to find and deliver information when needed, it is easier to file taxes, and it increases your chances of getting money.
Provides performance insights:
Bookkeeping assists your business in producing financial statements. These statements can track cash flow and analyse the strengths and weaknesses of your company.
Minimises uncertainty for strategic planning:
Financial statements can also show which initiatives succeeded and which did not, which can help corporate owners and shareholders prepare for the future.
Hire Bookkeepers in London, UK!
Hire bookkeepers in East London, North London or in any part of the United Kingdom to manage your daily business transactions. Our bookkeeping services can help you handle the administrative burden.
How Can a Bookkeeping Service Help Your Business?
By hiring an accountancy firm for your small business, you will make one of the most critical decisions as a business owner. An accounting company will take care of everything that is included in bookkeeping as well as accounting. Using bookkeeping services has massive benefits:
i) Allow You to Focus on Core Operations
You are burdened as a business owner with basic operations such as marketing, manufacturing, and managing client relationships.
As a result, you are unable to devote time to managing expenses, processing payroll, and timely payment of invoices. A bookkeeper can handle all these tasks on your behalf, giving you more time to focus on your company’s growth.
ii) Help You Comply With Regulatory and Statutory Laws
A bookkeeper guarantees that you comply with business and financial laws. Moreover, he will verify that your finances and books are current and accurate in case the regulations alter. It saves you time as you do not have to go into the details of knowing the laws yourself.
iii) Provide a Clear Picture of Your Financial Position
Financial documents, such as profit and loss statements, and accounting and expenditure records, provide a clear and accurate picture of your company’s performance. Well-maintained financial statements are essential for understanding your finances and applying for loans when necessary. Additionally, such financial reports inform you about the amount your company owes and how much it owes you. So, to get a detailed view of your finances, you should acquire accounting services as a company.
Also Read: Why is a Financial Audit Important?
iv) Offer Accounting and Bookkeeping Software
Since, as a business owner, you need to gain experience to utilise online accounting and bookkeeping software, it is always a good idea to outsource bookkeeping services for the purpose. The bookkeeping software includes several functions, such as basic financial statements such as balance sheets, profits and loss statements, cash flow, reconciliations etc, that make bookkeeping and accounting simple.
v) Prepare the Business for Tax Season
If your books of accounts are updated, you do not need to worry about placing receipts in place and finalising your books of accounts throughout tax season. A bookkeeper is responsible for keeping tax-ready financial statements and a balance sheet. Furthermore, it indicates you will save extra money and optimise your tax benefits.
Also Read: Who has to file self-assessment tax return?
Octa Accountants will manage Your Bookkeeping & Accounting!
Once a company operates, it is essential to invest more time and resources in maintaining accurate records. A precise estimation of a company’s performance is provided by proper bookkeeping. Additionally, it serves as a reference point for its income and revenue targets and a source of overall strategic decision-making information.
Now you may have some understanding of what is included in bookkeeping, but can you manage it all by yourself? Or will you hire a bookkeeper to do the job? Hiring professional bookkeepers can be more time-taking and costly, so why not consider taking bookkeeping services from a recognized firm like Octa Accountants?
Octa Accountants is a reliable accounting service company which provides a comprehensive range of outsourced bookkeeping, accounting, and consultancy services while handling the entire process anywhere in the United Kingdom.
Chartered Accountant vs. Certified Accountant: Navigating the World of Accounting Designations and Hiring process
Chartered Accountant VS Certified Accountant – both roles represent distinct professional paths with varying scopes and areas of recognition.
Ecommerce businesses need specialised accountants to keep accurate financial data. But hiring ecommerce accountants can be troublesome, so here’s what you need to look before hiring them.