The Role of Accounting and Bookkeeping in Business Financial Planning and Management
If you are a newbie to entrepreneurship, invest some time to understand the role of accounting and the role of bookkeeping in the growth of a business. Irrespective of its size, every successful business relies on streamlined accounting and bookkeeping.
Let us start by understanding the need for bookkeeping. Bookkeeping is an inseparable part of the business. Small, medium, and large businesses have to follow and apply its principles. Failing to do so can lead to problems.
The market is full of stories of failed businesses. As per the research, most fail due to improper accounts management, leading to financial mismanagement. Many companies hire reliable bookkeeping services to avoid it.
What is the Role of Bookkeeping?
Bookkeeping is recording daily financial transactions of the business. It is a systematic process of organising, classifying and maintaining financial transactions.
Bookkeeping provides you with organised accounts. It is the first step where you start accounting for your business.
The financial data organised during bookkeeping help you clearly understand your business’ financial health. You can also dive deep to reveal monetary issues you may need to neutralise.
You have to be disciplined with your bookkeeping and tackle it through proper planning, time management and scheduling. It is the only way to stay on top of records. Let us see the role of bookkeeping in your business.
Financial Analysis
As a business owner, you have to focus on cash flow management. If you are not regular in updating your accounts, you will need to do it at the last moment. It can introduce errors in your data which can create problems for you. It can affect your decision-making ability. It is why you must be prompt in invoicing and payments.
Tax Obligations
Bookkeeping digitises your financial information using accounting software. It helps track financial records. You do not have to scratch your head to remember small or big business expenses at the time of tax filing. You get to focus on business finance management and tax saving.
Empowering Investors
Updated books give the true state of your company’s financials. You can prepare financial documents filled with charts, graphs, and useful, latest data to build trust with investors. Such reports help them make investment decisions.
Business Planning
Regular updating of books is a necessity for every business owner. You can easily track financial details to determine whether or not the company is heading in the right direction. It also simplifies business financial planning.
Updating Records
As per ACRA, it is your responsibility to update your business’ accounting books regularly. The digitised data is easy to retrieve and is highly useful during the audit process.
During bookkeeping for your business, you have to deal with the following tasks:
- Recording of business’ payments and expenses
- Segregate and record transactions as debits and credits
- Send invoices promptly
- Process payments as they come
- Prepare detailed financial statements like balance sheet, cash flow, etc
- Maintain, update and balance a general ledger regularly
- Daily bank transactions
- Payroll processing
Bookkeeping Activities
During bookkeeping for your business, you have to deal with the following tasks:
- Document business’ payments and expenses
- Segregate and record transactions as debits and credits
- Send invoices promptly
- Process payments as they come
- Prepare detailed financial statements like balance sheet, cash flow, etc
- Maintain, update and balance a general ledger regularly
- Daily bank transactions
- Payroll processing
What is the Role of Accounting?
Let us get to the bottom of the role of accounting in your business. Accounting helps record, classify and summarise your business’ financial transactions. It is a process that gives you the true state of the business’ financial health and performance.
Accounting starts with the primary stage of bookkeeping and ends with the preparation of financial statements and management reports at the end of each financial year.
Accounting gives processed information as financial statements. These documents give you deep financial insights into what is working and what is not working in your business.
These deep financial insights help you in resource management and the strategic growth of your business. Let us see why accounting is important for your business.
Track Business Progression
Financial data helps pinpoint your business’ true financial position. Comparing accounting records of last year with the present gives you how business has progressed in one year. It is also useful for business financial planning.
Track Cash Flow
Update your books of accounts regularly. You need them to track business’ working capital and cash liquidity and to understand its financial solidity.
Business Compliance
Record your company’s liability promptly and with precision. It helps in paying your suppliers, vendors, creditors, and lenders on time.
Forecasting and Budgeting
Past accounting records enable you to budget your expenses as per a specific strategy. The latest financial statements and management reports provide reliable data for making day-to-day decisions about business financial management.
Statutory Filings
Updated accounting records come in handy for filing statements and taxes with regulating agencies like ACRA and IRAS. You do not have to work till the last moment to ensure your compliance.
As a newbie business owner, you will do yourself a favour by understanding the role of accounting and the role of bookkeeping, and updating your books regularly. A professional provider of bookkeeping services Singapore can help you with it.
Bookkeeping services can also help you use financial data to prepare better plans, firstly, to ensure business survival and, secondly, to ensure its growth. They can simplify your tax compliance, provide data for business decision-making, and help you attract investors.
Call us at +65-6536 0036 or email us at info@sbsgroup.com.sg for customised bookkeeping and accounting solutions.
