Importance of Bookkeeping and Money Management
Bookkeeping also refers to the activity or occupation of keeping records of the financial affairs of a business. Some of the common transactions that are recorded in bookkeeping includes acquisitions, receipts, sales and payments by an individual or an organization or corporation. Single-entry bookkeeping system and the double-entry bookkeeping system are the most commonly used types of bookkeeping. A bookkeeper mostly does the recoding of the day to day financial transactions of a business.
The following are the reasons why bookkeeping and financial management is essential to the growth of a business. Bookkeeping helps businesses to be in a position to manage and analyze its finances. Furthermore, it provides businesses with opportunities of up to date follow-ups and on-time payments. On the other hand, Bookkeeping keeps track on any information and documents to accomplish annual taxes. Through money management, business is also able to compute the tax returns. Besides, the process of reporting the business progress to investors on crucial information becomes easier through bookkeeping and money management. A business that incorporates bookkeeping and money management strategy Is in a better position to plan its strategies well and also keep records of its transactions as required by law.
For an individual, money management provides security of being in the know of the resources that one have to counter unforeseen expenses including being fired from work, car breaking down and other unexpected expenses. Also, efficient money management helps in reducing stress and conflict. As an individual’s income grows, his or her financial planning will not just involve budgeting so that all the expenses are covered each month, but also determining how to invest the surplus that accumulates above what they spend. Through efficient money management, one can achieve their planned long-term goals including buying a house, starting a family and saving for all the things they hope to achieve in the near future. Besides, properly managing money enables one to pay them off and ease his or her dependency on them, also, those school loans will seem less of a burden once one factor them into a budget that you can comfortably adhere to.
The following are the guides on effective bookkeeping and efficient money management. First and foremost, you need to be familiar with the accounting software such as QuickBooks. In addition, one can choose to consult a local bookkeeper who will offer the services they need, and turn the books over to a certified public accountant for planning and tax preparation at the end of the year. It is vital to have different account, a personal account, and a business account.