Accounting is considered to be the soul of every business, and bookkeeping forms its most imperative aspect. Recording of financial transactions is essential for businesses to gain valuable insights into their actionable data. A majority of businesses failed in their initial five years, and the most common reason for their failure was their poor approach towards accounting. This is the reason it is always recommended to update accounting records and bookkeeping on a consistent basis. Thinking as to what exactly are the benefits associated with the same? Let us throw some light on it.
Important Stats & Facts
- As per AB Newswire, the accounting market size was $2.62 billion in 2018 globally and is expected to go past $4.25 billion by 2023.
- According to a report by MineralTree, one hour per day is saved for the professionals of accounts payable with the help of automated payments and invoice capturing.
- As per a Google source, the approximate non-written bookkeeping history dates back to 8000 B.C. and the written one to 4000 B.C.
- According to the Sage Practice of Now 2018 report, almost 66% of accountants are willing to invest in technologies like artificial intelligence.
- As per another source by Google, the first bookkeeping book having complete written text, “Everything About Arithmetic, Geometry, and Proportion”, was written by Frater Luca Pacioli in 1494.
Benefits of Updated Accounting Records and Bookkeeping
1. Detailed Recording
One of the best benefits associated with regular updating is the fact that you get a detailed recording of your financial transactions. This means your bookkeeper will not only be able to simply supervise your accounting process but also aid you during the preparation of financial statements or at the time of auditing. Why? The simple reason being detailed recording enhances the speed of such processes, along with proving to be cost-effective at the same time.
2. Effortless Tax Preparation
Most business owners fail to prepare their taxes timely and accurately. This happens due to the fact that they fail to maintain their financial records regularly and efficiently. When you have updated, accurate, and organized financial records available to you at the time of tax season, preparing and filing the taxes become effortless. This means you do not have to struggle to deal with the complexity of finding and managing multiple invoices or receipts during the tax season as you have already sorted them on a regular basis.
3. Avoid Interest and Penalties
This comes as no surprise as when you are able to prepare and file your taxes timely and efficiently; you will be in the safe zone of the IRS. As compared to other businesses who might be struggling to prepare their taxes during the busy tax season and are likely to be at the receiving end of the IRS, you will be able to avoid the interest and penalties from the IRS at large.
4. Proficient Financial Management
Managing your finances is of utmost importance as it clearly allows you to take control of them. You get to know about the invoices owed by your customers or you and how exactly you are spending your finances. Regular bookkeeping helps you to make timely bill payments, along with receiving the same time for your services or products. This will benefit you at large with respect to the cash outflow and inflow of your business.
5. Knowing Financial Situation
If we talk about the most successful businesses, they know exactly where they stand annually, quarterly, monthly, weekly, and even daily. This is imperative in terms of running your business with respect to meeting your goals, keeping finances in the budget, and paying for expenses like rent, utilities, payroll taxes, employee wages, and more. Apart from this, you cannot really keep compliance with the federal, state, and local federations unless you have proper financial control. So, in short, for strategic decision-making, you need to know your financial situation, and that can only be achieved when you maintain your books regularly.
6. Accountability and Transparency
With regular bookkeeping and accounting practices, accountability is created amongst customers by reviewing their past payment history. Also, the trust of business partners increases a lot as they do not have to wait for the end of the year to know where their contributions were used. This overall process leads to zero conflict of interest and enhanced transparency, boosting the confidence of investors and business partners eventually.
7. Time and Effort Saving
There is no denying the same. When you will update your accounting records and bookkeeping constantly, you will not have piles of financial data to sort and manage. This means fewer data and its complexity to deal with, saving you an ample amount of time and effort. Business owners can utilize the same in devising strategies for business growth and scalability. In case you are too busy to deal with regular bookkeeping maintenance, you can opt for a renowned and trusted bookkeeping outsourcing company and save the same amount of time and effort.
This concludes the fact that efficient and regular updating of accounting records and bookkeeping is essential for a business to not only streamline its accounting process but to keep compliance with the IRS guidelines. Every successful business model is based on making timely and informed decisions, and this is only possible when a business has successfully worked on its financial records throughout the year. Unless a business owner gains accurate and detailed financial insights, he won’t be able to know the pros and cons associated with running his business.
If a business looks forward to staying ahead of the competition, it needs to streamline its internal processes first, especially the accounting ones like bookkeeping. So, make sure you are updating your financial records timely and accurately.
Putting in consistent efforts for updating financial records demands time and expertise? Are you finding it difficult to manage the accounting and bookkeeping processes of your business? If yes, join hands with Accounting To Taxes (ATT)! We have been providing successful outsourcing bookkeeping and accounting services for more than 11 years to businesses worldwide. Contact us for a free trial and let us prove our potential to you!