Importance of Bookkeeping Systems

It is mandatory for a firm or organisation conducting business to keep accurate bookkeeping

records that needs to be produced at the end of a financial year. The set of accounts should show the sales income, incurred expenses and profits for tax purposes. These businesses employ the services of accounts clerks and expert bookkeepers in order to maintain financial records and to generate accounting information and reports on a regular basis. Small business firms and self employed people have to make a choice related to the way financial accounts are maintained and re-produced. A small firm might employ the expert services of bookkeepers to look after the accounts while some other firms may opt for manual recording of financial transactions. Still some others make good use of a customised bookkeeping software system. Advantages and disadvantages abound while making all these kinds of methods and techniques work for you. It is wise to make a definite decision about the system that has to be adopted to take care of the bookkeeping part of the business, at the very outset itself. Financial control over the different business activities a firm undertakes to accomplish and a very clear knowledge of how the business is performing at a particular point in time is crucial to success in any kind of business environment. The problem with a business not taking a decisive decision on its financial accounting principles and procedures assumes prime significance as the sales invoices, purchase invoices, bank statements and records and debt records have to be kept in the best possible order at the end of a financial year for purposes of taxation. Failure to keep an accurate record of financial transactions often results in administrative burdens of all sorts. For instance, if taxation deadlines are not honoured, it may lead to hefty penalties. In the case of a small business owner opting not to stick to the use of bookkeeping software or not to outsource the financial function to some bookkeeping companies or experienced bookkeepers, an accurately maintained manual financial recording system is a must. Generating an income and expenditure report for a business using the various financial documents is not that simple and most of the independent bookkeepers are capable of managing this part because they have acquired the skills required to keep such bookkeeping records. If a company chooses to stick to a manual bookkeeping system, a well-disciplined recording of all the financial transactions, that too, on a regular basis must be strictly enforced. This must be carried out as an essential function; and not as an administrative burden to the company. With the help of good accounting system, one gets to see and understand the financial position of a firm or business organisation at any given time. It will also aid one in taking positive actions as and when required in order to achieve a satisfactory and convincing financial result.

Importance of Bookkeeping Systems

By: vish ks

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