The foundations of a growing business are largely dependent on the bookkeeping and accounting methods. While the size of the operations can vary from a home business to an MNC, the quality of the accounting support you have incorporated into the system. The accounting and finance department needs to spell out the issues in the accounting area to maintain a balanced growth and adapt to the various issues pertaining to the expansion of the business.
What Is the Need for Bookkeeping?
A company’s financial records and statements are dependent on solid bookkeeping. The following reasons explain the importance of bookkeeping in businesses: –
- It helps plan the periodic Budget and Forecasting along with fixed and working capital planning
- It helps to pay taxes easily – preplan tax payments and deferments to benefit the firm
- It helps the small business owners to analyze the performance of their business
- It creates transparency between the owners and the investors.
- It maintains a balance between the profits and the losses and helps to focus on the strategies of better financial planning.
- Bookkeeping facilitates an easy and peaceful approach at the time of audits.
How Poor Accounting and Bookkeeping Affects Your Business?
Let us discuss some of the negative impacts of poor accounting methods: –
- Credit Score
Poor financial records can make you lose touch with your debts and all the due clearances. This, in turn, makes you less trustworthy in the market and amongst your investors. Further, it can affect your credibility and credit score thus may land you up in trouble.
- Sales Blockages
Poor accounting may prevent you from making timely payments to the suppliers. This in turn can result in losing many clients due to untimely and slow production.
- Legal issues
If there are inaccuracies in your company’s bookkeeping, it may affect your tax payments and cause unnecessary deductions. At a time when the business is already in the growth phase, this failure becomes quite challenging and problematic. Sudden disruptions can mar your reputation and you may have to face legal issues.
- Business Expansion
Keeping a track record of your business helps you to plan your goals and expand your business.
- Decisive control over the company
Any business is run by several departments working simultaneously towards the company’s growth. To build a valuable bond with the investors and the clients, you need to have a proper accounting plan with a focus on all the areas like budget, cash flow statements, etc. a proper plan helps to exhibit the current status of the company and keeps a check on any leakages in cash.
How to Eliminate the Errors in Bookkeeping?
The following checklist can help you manage your accounts: –
- Update all the accounting books irrespective of the method of accounting.
- Keep a copy of all the receipts and transactions.
- Compare your accounts with other financial documents to avoid errors.
- Keep your personal and professional bank accounts separate and updated.
- In case you have a small or big business you can hire accountants to settle the accounts.
Inadequate bookkeeping can make you run out of sources of investment. It is the most important segment of running a successful business and creating a stable system. Do a thorough and timely check of your business accounts to avoid any legal or financial issues.
BFAG (Boston Financial Advisory Group) provides the best accounting and financial services. We have a team of experienced professionals who can help you in maintaining your books of accounts.
Get in touch with us to avail of our services.
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