Accurate bookkeeping and accounting may seem like a burden if you are trying to grow your business but to ensure long-term growth, bookkeeping is crucial and may turn out to be a winning or losing factor for your business. Bookkeeping is the practice of maintaining various accounting and financial transaction records for any business such as ledgers, journals, financial statements, income tax records, and more. As a business owner, you might often wonder what the importance of bookkeeping is. As bothersome as it is to have to record every financial transaction, accurate bookkeeping is not optional when you’re running a business. The advantages of bookkeeping accurately are immense and can help your business grow to another level. Also, keeping accurate financial records is a legal requirement for any business. Any business that does not accurately record its accounting and bookkeeping practices can run into severe compliance trouble, which they certainly want to avoid at all costs!
Here are some reasons why you really should record all your financial business activities accurately.
1. Help Avoid Penalties – Tax for businesses involves an exact calculation of various financial activities occurring in an entire year to calculate revenue, expenses, etc. Errors with these calculations can invite penalties from taxing organizations. Paying taxes is not a loss; paying additional penalties due to tax errors is a greater loss. Accurate bookkeeping can help avoid such errors and penalties.
2. Builds Trust- Accurate financial records induce trust in your company. Investors are willing to put their hard-earned money into a company that is doing well. Accurately balanced sheets of many companies may show profits, only to be found later that they were actually concealing losses. Many large-scale organizations have succumbed due to inaccurate or twisting financial statements. Due to this, government institutions have made compliance rules more stringent than ever.
3. Better Planning & Decision Making- Any finance manager would first look at the asset value he currently holds to decide whether he can afford to purchase more. Financial statements allow for educated decision-making and strategic planning. These financial statements will exhibit all the cash flows statements, trading funds, how much the business is making, how much funds they need, how much they have in their account, and how they propose to increase sales and boost financing.
4. Evaluate Tax Liability- Corporate tax rates tend to be high and if an organization is running in profit, the tax amount they have to pay is equally high. The question is, can they reduce their tax burden? The answer is yes and it can be done through accurate accounting. If they do not do so, their resources will deplete in a short period.
5. Better Payroll- To optimize the Accounts Payable and Accounts Receivable cycle, accurate financial statements play a vital role. Other outgoing payments consist of salaries and daily wages that need to be paid, dividends that need to be given to shareholders, inventory costs, etc. All these payments cannot be managed unless the numbers are not in order.
Above mentioned points emphasize why companies must maintain accurate financial statements. Keeping accurate accounting and bookkeeping can help businesses to earn a profit, which they can utilize in a better investment. Our experienced and skilled team of accountants is essential that adds strength to bookkeeping operations. Save yourself from the hassles by maintaining proper accounting and financial records of your business transactions with Ontaxco. We can provide impeccable accounting services in Delhi that can help your business grow.
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