What is Bookkeeping and Why it matters?
Bookkeeping generally means keeping records and keeping it organized through systematic recording of financial records of a company. This process is essential for the growth of a business, and the more robust and professional the accounting practices are the more chance of the company grow exponentially.
The bookkeeping process should be undertaken from the very first day of the inception of the company’s financial transaction period. The process should be carried out on a day to day basis, which would preferably include financial transactions plus information about a business. When keeping these financial records, it is possible that a false entry could slip into the record and in the end, mess up everything. That is why accuracy is vital to the process, and that is why businesses opt to outsource the accounting part of their business to be handled by professional accountants, who have the expertise and the ability to complete these tasks on a day to day basis.
Tasks of Bookkeeping
Bookkeeping is essential for not only businesses but also individuals and non-profit organizations. All of these three need to keep a record of and track numbers which are involved in the business side of things.
Whoever is taking care of your business or financial accounts would be responsible for recording transactions of including
- Expense payments to suppliers
- Invoices of customer payments
- Maintaining and keeping general financial reports
- Sorting Asset Depreciation
- Paying off Loans
You may hear the terms accounting and bookkeeping interchangeably, but the reality is that accounting is the major practice of managing the finances of a business which could be referred to as a broader term. While bookkeeping is a specific process of recording financial activities.
Traditional bookkeeping is tedious and dull, and that is why business owners keep away from it because it requires a lot of time and effort to be done. It takes away their focus away from their business operations because bookkeeping includes a very tough double-entry system, ledgers and chart of accounts.
The double-entry bookkeeping has two parts to it, meaning every transaction is going to be recorded twice in the form of a debit entry and credit entry and if at any point both debit and credit doesn’t add up, then it means an error has occurred while recording transactions.
Bookkeeping has evolved with the accounting industry, and with 100% online applications, such as Xero, bookkeeping has changed for the better. Xero bookkeeping has freed up space that was once taken by an excessive number of papers, filling up storages of desktops, but now there is no concern for it because now with Xero bookkeeping, the data is backed up in the cloud with unlimited storage.