Bookkeeping is the method of keeping accurate records of company spending and revenue. Some small business owners choose to do their own bookkeeping to save on expenses while others prefer to hire a qualified accountant. Aside from making recording taxes straightforward, there are benefits and advantages to doing proper bookkeeping that every business owner should know.
Financial Comparison
Organisations bookkeeping system allows a business owner to analyse spending and revenue one item at a time. The data can be classified by the week, month, quarter or year to be analysed and compared to past years. This is one way that business owners can identify ways to cut back on company spending and increase profitability.
Payroll
Bookkeeping includes verifying the correctness of each payroll period to make sure that each worker receives the precise amount -- an especially significant function in organisations that pay bonuses, supplemental payment and sales commissions based on a percentage of revenue. Confirming payroll numbers keeps employees pleased with their pay and limits the business from over- or underpaying payroll taxes as well.
Budget Monitoring
Businesses require a detailed report of current spending and revenue to help compare actual results with projections in the yearly budget. A bookkeeping system facilitates up-to-date business financial information that can be cross-checked with the budget to make sure that the business is not overspending. Bookkeeping also recognises instances of under-spending so the company may find new uses for the extra money to help productivity.
Tax Deductions
A comprehensive bookkeeping system makes it easier to report earnings for tax filings at the end of the year, but a comprehensive spending profile can also aid you to find tax deductions that will reduce your tax burden. When a business owner decides to do their own bookkeeping, they need to stay up to date on reforms in the tax code and tax laws that may enable them to take deductions to help offset the costs of doing business. Without a bookkeeping system, they would have no documentation to support their deductions.
If you are looking for an experienced accountant specialising in bookkeeping services, do not hesitate to call DJK Partners today!