Businesses that can enjoy long-term financial health rely on proper recording and organization. The role of bookkeeping is to record financial transactions regularly in order to create a clear financial picture. By understanding current positions, business owners are able to make informed decisions in regard to investments, structures, and practices.
When managed properly, financial data is a hugely beneficial tool for owners and investors alike. In addition to insight into the current financial health of a business, bookkeeping helps to analyze company performance and simplify necessary end-of-year responsibilities such as tax filings.
The Advantages of Professional Bookkeeping
From the day that a business opens its doors, it begins to form a paper trail. Whether incoming or outgoing, each transaction leaves a mark on overall financial standings. Without keeping track of debits and credits, it is impossible to fully understand your day-to-day spending and earnings.
Depending on the size of your business, it can be difficult to monitor financial records on a daily basis. Each transaction is normally monitored through documentation such as receipts or invoices, which can be recorded daily, weekly, monthly, or bi-weekly. The bookkeeping process compiles this data into in-depth financial reporting that can then be used when growing your business.
More than a simple list of figures, a certified bookkeeper can help to direct owners into the most appropriate recording style for their clients. Small, cash-based businesses may choose to use single-entry record-keeping while larger or more specialized industry professionals may opt for double-entry record keeping. CRSP associates are able to discuss recording options, making information accessible.
The Bookkeeping Process
Bookkeeping and accounting are often confused or mislabeled. While both of these deal with financials, accounting is more focused on specific services such as managing tax returns and filings while bookkeeping revolves around daily practices and transactions. Accounting cannot function without regular bookkeeping. Many small business owners attempt to manage their company financials through basic accounting software, such as QuickBooks online but these tools are prone to error and can be confusing.
The most important aspect of bookkeeping is to ensure that books balance at the end of the month. When assessing balance sheets and a chart of accounts, bookkeepers are able to diagnose any issues with cash flow and increased expenditures that may be hurting your business. By providing timely reports, owners and investors have the time to address any issues, resulting in quick corrections.
Along with the regular recording of transactions and financial statements, bookkeeping professionals create income statements for accounting firms in preparation for tax time. This means a full analysis of revenue, costs, and expenses. From these financial insights, accountants can help to prepare your filings accordingly.
Without expert bookkeeping, businesses will suffer. This subset of accounting helps to promote daily financial health through consistent and thorough recordings. In the past, hand-written ledgers may have been the best way to record daily business activity but professional firms are bringing this necessary practice into the modern age. CRSP associates create robust financial statements by combining industry knowledge, experience, and specialized technology.