One of the most important functions of an organization big or small is ‘financial management’ that includes accounting and bookkeeping processes that ensure complete track of all financial transactions. Bookkeeping is part of accounting and needed by an organization to make sure their finances are in order and also helps in preparing tax returns on time.
Bookkeeping should be an essential function for small businesses to maximize their operations and sustain in a competitive market. The reasons why bookkeeping services are vital to managing the finances of an organization effectively are
- Improve the financial health of a company
An effective and efficient bookkeeping system will help your organization to track the performance and know if the business is making a profit or is in the loss. Bookkeeping helps to monitor the progress of a business company
- Tax savings
A comprehensive and timely record of all financial transactions will make it easy for you to prepare the tax returns on time. It is not easy to get along and gather all the financial transactions at the last minute, but with bookkeeping, the records are maintained daily. The payments and invoices will not be missed and improve your tax returns without any errors. A bad book can cause a penalty and affect negatively on your business
- Better cash flow
Small businesses depend considerably on the daily cash flow, and its tracking can only be possible through proper financial records. It is has been noted that many business companies collapse all of a sudden due to mismanagement of cash flow.
- Business planning is easier
An accurate and effective accounting system helps an organization to know about the progress of the company and make timely decisions accordingly. Without a bookkeeping mechanism, the organization would not be able to plan and implement certain financial strategies
- Help during the audit process
When the audit process happens, you need to make sure that your books are in order. Incomplete paperwork and missed financial record can easily prolong and complicate the auditing process and result in hefty fees and penalties. Bookkeeping service will give you an advantage as you can quickly provide all the relevant details without any errors.
- Timely reports for investors
Preparing a progress report for your investors and stakeholders can be quite stressful and challenging as you need to be clear and have accurate details. It becomes easy for you to do a presentation when you have exact numbers, charts, and graphs in front of you. Bookkeeping services allow you to inform investors of the current and projected financial performance
Bookkeeping may seem a burden for many small businesses when starting a business, but it is a necessary function to help an organization establish its business and prosper in a highly competitive market. A well-defined and clear bookkeeping system is vital for business big or small to effectively manage the day to day transactions, to minimize any discrepancies and loss, and maximize profits.
Apart from the bookkeeping system, another important aspect which many small businesses tend to overlook is tax planning. The activities performed to minimize tax liabilities is known as tax planning, and it includes evaluation of other financial elements such as allowances, deductions, exemptions, and exclusions. The effective management of financial elements will help to reduce the total tax bill. The tax planning strategies are necessary for an organization to achieve its operational and financial goals. The advantages of tax planning for both small and big businesses are
- Lowering the amount of taxable income
- Reduce the total tax rate
- Allow the control of when to pay taxes
- Maximize tax opportunities such as tax relief and tax credit
There are many companies that offer cost-effective bookkeeping and tax service for numerous small businesses and startup organizations. There is a wide range of services, which include monthly bookkeeping, tax preparation and reporting, payroll, and financial consultation. The company will first know about your organization then tailor their financial services according to your business needs and requirements. The type of services include
- Accounting software selection and implementation
- Bookkeeping system
- Payroll services
- Tax preparation and planning
- Sales tax services
- Review of financial reports and statements
Efficient tax preparation and planning can help your organization to reduce any future tax liability. The financial services can help your organization to proactively manage your financial issues, understand your difficulties and opportunities, and how it can affect your future. The tax laws can be quite confusing and challenging for most new business owners. Apart from the regular services, the services will also help your organization to identify new ways to reduce the local, state, and federal tax liabilities.
Russell Peters is a qualified accountant and currently setting up an accounting and bookkeeping system for a startup organization. His expertise includes developing an effective bookkeeping and tax service, which makes it easy for the organization to manage its financial transactions and tax returns.