Any existing business that smoothly runs is credited to its bookkeeping and accounting system. Though bearing different functions but interdependent, these systems serve as the backbone of any company.
While bookkeeping is a company’s responsible way of documenting business and finance transactions (sales, purchases, receipts, payments, etc.), accounting is accountable for summarizing and analyzing financial data from bookkeeping.
A company that invests even in a small business accounting software can have so many advantages, and here are the ways of how they are helped:
Monitor Company Growth Rate and Profit
An organization’s financial position is reflected in its financial records and reports. These records help businesses compare their current and previous performance and give room for improvement and success.
Prepare Authentic Financial Statements
Having a well-kept record-keeping system help companies in effectively managing their business. Journals, balance sheets, and ledgers serve as proof of a company’s legal assets and liabilities. Some use invoice makers apps to make documenting of financial records faster.
Proper Identification of Income Sources
Businesses receive income sources in different forms; it can be monetary or property. These income sources are well documented and identified by bookkeeping—business from non-business receipts and taxable from non taxable income.
Attain Complete Regulatory Compliances
Legal obligations are always a part of taking care of a business. Income and expenses need to be well documented as a basis of tax reviews andimplementation. Some records are asked to be kept for three years (in the US), six years (Canada), or up to 10 years (EU) to ensure the authenticity of the business.
See this infographic from KIPPIN to know more about the advantages of good record keeping and accounting.