Bookkeeping forms the basis of all the accounting procedures of a business. The management requires data of the company to analyze the various business activities being conducted and also formulate a future plan for the company, and this is where Bookkeeping comes into play. Let us know more about what is Bookkeeping and how does it help a business to prepare for the future.
- What is Bookkeeping?
- What is the need for bookkeeping services?
- Why is Bookkeeping necessary for Businesses?
- What are some good bookkeeping practices?
- Why outsource Bookkeeping services?
- How can you choose the best Bookkeeping services for your Business?
What is Bookkeeping?
When a business is established, it undertakes a number of transactions during its inception. Some of these transactions are important, and some of them can be a decision taken in the heat of the moment and can have adverse effects on the business. The process of accounting helps the management to understand the various transactions which are conducted, but in order to conduct the accounting procedure, it is necessary for the management to record all of the transactions conducted by the Business. This is where Bookkeeping comes into play.
Bookkeeping can be defined as the process of recording all the financial transactions made by a business. It is the responsibility of the bookkeeper to record, classify and summarize all the transactions of the business so that they can be used further for auditing and other business activities.
Many people think that the process of Bookkeeping is the same as the process of Accounting, but this is a misconception. Bookkeeping can actually be considered a subset of the Accounting function.
In Bookkeeping, it is required that all the transactions of a business are recorded and classified, whereas, in accounting, the recorded transactions are further analyzed to find out what is the present situation of the Business and also derive a future plan.
What is the need for bookkeeping Services?
As we have seen, bookkeeping refers to the maintenance of daily business records. Let’s see why this is essential for any business. As we now understand that bookkeeping refers to the maintenance of daily business records. Let’s see why this is essential for any business.
Bookkeeping eases the process of company audit
It is essential for future forecasting and decision-making
It helps to reduce any malpractices
It helps in preparing financial statements
It provides an easy understanding of inflow and outflow mediums of cash
Method and Need of Bookkeeping Services for Business Entities
The most preferred method of bookkeeping is the Double-Entry method, where each transaction is recorded twice in the two corresponding accounts simultaneously. The total debit must be equal to the total of credit to maintain the financial balance of the firm.
Why is Bookkeeping necessary for Businesses?
The process of Bookkeeping is one of the basic activities which cannot be foregone or replaced in any other way. Moreover, this is the activity that allows an accountant to be able to do his work. Were it not for Bookkeeping, and no business would have been able to function to its full potential. Bookkeeping not only helps the accounting process to happen properly but it is also required to conduct various other services such as Auditing, Tax filing etc.
Not all the transactions of the Business can be remembered, and as the size of the business increases, so does the number of activities also. At some point, the management needs to start recording all the transactions of the company. This will also help in a later date as the management will be able to compare the present situation of the company with the past performance.
In today’s world, more and more freelancers are coming up, and for a freelancer, it is very important to not forgo the bookkeeping process. The bookkeeping process will help him to record all the necessary parts of the Business and will also help in the generation of utility and value from the Business. To know more about what bookkeeping mistakes should not be made by a freelancer, read out the blog titled “Importance of Bookkeeping for Freelancers.”
The Bookkeeping process can be very important for a business for the following reasons:
- To keep the account books of the business updated
- To make sure that the management receives all the information about the various transactions made
- Keep track of the cash flow of the business will help in creating a plan for the future.
- Using bookkeeping records the management will be able to utilize the resources and raw materials in a judicious manner.
These are some of the advantages of using bookkeeping for a business. There are many more advantages which can be added to the list.
What are some good Bookkeeping Practices?
The importance of Bookkeeping is clear to all of us. There are certain practices that should be followed by the businessmen so that all the financial transactions of the Business are recorded, and they do not face any problems in the future. Some of the good practices for Bookkeeping are:
- First of all, when starting a business, the businessman should keep all the transactions separate. There are many instances where the businessman operates out of the same books of accounts for his personal use as well as for the Business. This is not a correct practice as this may create confusion in the future.
- All the expenses of the Business, no matter how small, must be recorded. It is better to have a complete recording of the business expenses so that they can be utilized in the future.
- As the size of the Business rises, so does the roles and responsibilities of the bookkeeper. At this stage, the management should avail external assistance so that there is no error in the recording of the transactions of the Bookkeeping.
There are many other bookkeeping practices that should be followed properly. To know more, read our blog titled “Top 8 Bookkeeping Practices for your Business.”
Why Outsource Bookkeeping Services?
A business has the option of either keeping a separate department for Bookkeeping and Accounting, or it can outsource the particular services to a third party. There are advantages and disadvantages of each move for the management, and it is important that the management understand the need and requirements of the Business and acts accordingly.
Only the companies which have a solid backing or do not have to worry about funds will be inclined to keep a separate department for Accounting and Bookkeeping. When the Business is growing, and not much funds are available, the management will tend to go for outsourcing the bookkeeping activities of the Business.
There are many advantages of availing outsourcing services for Bookkeeping. These advantages include:
- It saves both money and time for the company. The company will be able to utilize these resources for the betterment of the company.
- With better bookkeeping services, there will be a visible improvement in the cash flow of the Business. Since the management will be able to track all the transactions of the business, they will be able to make better decisions for the future of the Business.
- The accounts of the company will include record all the transactions of the business, which will, in turn, help the management while filing for taxation.
To know more about the benefits of outsourcing the bookkeeping services of a company, feel free to read out the blog titled “Top 7 Advantages of Outsourcing your Bookkeeping Services.”
How can you then choose Best Bookkeeping Services for your Business?
Selecting a bookkeeper can be very crucial as even a small mistake made by the bookkeeper can result in a huge blunder as the effect of this mistake will be compounded. There are certain things that should be checked before a bookkeeper for the company is chosen. These points are as follows:
- The reviews of the bookkeeping firm need to be checked as these reviews will provide a fair idea as to how the firm works and how effective are their services. The company can check with the former clients too to better understand the workings of the company.
- Various bookkeepers have different specializations, and this means that different bookkeepers have different expertise. The management should first understand the requirements of the Business and, accordingly, choose which bookkeeper will be best suited for the Business.
- The quality of services provided by the firm is rather important for the management to decide whether they should avail the services of the firm or not. The firm which provides the highest quality of services at an affordable price has the best chances of being chosen by a business for outsourcing purposes.
There are various other points to keep in mind by the management while choosing an outsourcing firm. To know more, read our blog titled “How to Select the Best Bookkeeping Firm in Dubai?”
JAXA Bookkeeping Services
JAXA, one of the top bookkeeping and accounting firms in Dubai, provides a wide range of bookkeeping services considering a holistic view of business entity types. We deal from the initial to the advanced bookkeeping services. Some of these services include:
- Company profile setup
- Maintenance of bills
- Maintenance of customer invoice and payments
- Reconciliation of bank accounts
- Custom-designed reports
- Quarterly budget reviews
- Payroll and tax management
Evaluation of Bookkeeping Services at JAXA
A business entity has a mandated rule to follow the bookkeeping and accounting service according to law. Now, at one point it becomes a necessity to evaluate these recordings based on certain parameters for any organization so as to know the level of their performance and stability.
We at JAXA evaluate the bookkeeping services on the basis of cost, income and expense categorization, payroll, tax service, software used to maintain the book of records, customer service provided by the business entity.
Why Outsource Your Bookkeeping with JAXA?
It’s a difficult and complex process to manage a book of accounts when it comes to international business. At this point, outsourcing bookkeeping services turn out to be a relief. Whether you are initiating your startup or have an established business and want to structure or re-structure the accounts and finance domain, you can count on us. At JAXA, we understand your business and deliver tailor-made solutions according to your business needs. Our business experts take care of your financial front, builds specific plans to enhance your business growth. To initiate your first step, do contact us – we’d be happy to assist you.
What is the difference between bookkeeping and accounting?
Bookkeeping refers to the recording of financial transactions whereas accounting is the periodic processing of these records for various business purposes like reporting, budgeting, strategy and planning. In a way, bookkeeping is a prerequisite to accounting.