Bookkeeping and accounting services includes organizing, classifying, and maintaining financial record. The account is maintained online by using software like Tally or other cloud-based software. Bookkeeping mainly aims to record and organize financial data whereas accounting aims to interpret, analyze, or presentation of data to respected users. Bookkeeping can be handled by any competent employee but accounting is handled by any professional. Accounting services include more advanced tasks.
What are the main components of bookkeeping?
Bookkeeping is an important task as it provides records necessary to interpret data, analyze them, and present them. Proper recording and planning help the business to get a clear and transparent overview of an organization’s health.
Components of bookkeeping are Documentation of each and every financial transaction, recording of debits and credits of accounts, invoices, and processing payments, preparation of financial statements, balancing and maintaining a ledger, and completion of payroll functions.
Why is accounting required for the business?
Accounting services and bookkeeping services are the main components of business. With this any business whether small or large can make better decisions and invest where the risk is involved less and reduce error to increase efficiency.
These services are required to maintain proper records of every transaction, analyze them properly, present them, and communicate them to the external or internal users of the company. Bookkeeping helps you prepare for tax, maintain organized records, and give you peace of mind.
Importance of accounting for small business
- Without comparing and analysing no business would grow. Keeping a record of accounting is crucial to checking the performance of the business.
- To apply for any loan, the business should be required to show a financial report. The business has to how three years’ worth and one year’s cash flow to acquire a loan.
- It is better to make accounts because if any time you want to sell your firm right now you need to show the financial position of the firm.
- Accounting services assist in payments. Like if the balance sheet shows how much is due amount. Using accounting we may get to know how much money we received and how much is left.
- If your reports contain errors then might be in trouble.
Bookkeeping in small business
In small business, mostly the bookkeeping is done by employees only because it doesn’t need much professionalism. To not make things complicated, every transaction of debit and credit should be recorded. The ledgers should be organized and straightforward if you have few employees.
Bookkeeping is more suitable for small businesses and as businesses grow, they need professionals to record transactions and analyze them. These services can be done not only in small and large businesses but also in LLPs. In 2008, LLP incorporate in India. Every LLP should maintain records that are sufficient to show and which explain the transaction of the LLP. It should disclose every materialistic data and show the correct financial position of LLP.