Five Benefits of Good Bookkeeping and Accounting

Five Benefits of Good Bookkeeping and Accounting

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As a small business owner or entrepreneur in Singapore, you may find it hard to navigate the complexities behind bookkeeping and accounting. Most of us even tend to overlook the vital role they play in maintaining a successful business. But not our team of experienced chartered accountants, we are dedicated to help you in keeping a strict regime, monitoring closely on the financial activities of your company. Besides, in this article, we are going to highlight the importance of bookkeeping and accounting and five benefits that your business could get out of it.

What is Bookkeeping and Accounting ?

Bookkeeping is a subset of accounting that involves maintaining the company's financial records on a daily basis. This includes recording all transactions in the company's accounting system, reconciling bank statements, and preparing reports for the accountant to review.

Accounting is the process of tracking, organizing, and analysing a company's financial transactions. Financial statements like balance sheets and income statements that you must have heard of provide a snapshot of the company's financial health, allowing you to see how well the company is performing. For more technical insights, you may refer here.

To give you a better picture of real-life scenarios, let us look at some examples:

Imagine you own a small business that sells handmade crafts. Every time you sell one of your crafts, you need to record the sale in your books. This involves recording the amount of money you received from the sale, as well as the date and any other relevant details. This is an example of bookkeeping.

Now, let us say you want to know how your business is doing financially. You can use the information you have recorded in your books to prepare financial statements, such as an income statement, which shows your business's revenue, expenses, and profit over a certain period of time. This is an example of accounting.

In summary, accounting involves the preparation of financial statements to help understand the financial performance of a business, while bookkeeping involves the day-to-day recording and classification of financial transactions. Now, why do we need it?

What are the Benefits of Bookkeeping and Accounting?

Upkeeping accurate and organised bookkeeping and accounting records is not only a legal requirement, but they are also essential for the sustainability of your business. Whether you choose to outsource these services or carry them out in-house, applying decent practices can benefit your business in both the short-term and long-term. The following are five benefits that you can receive upon implementing these practices:  

  1. Meeting Legal and Financial Obligations

A good bookkeeper and/or accountant will always be aware of the latest rules and regulations, therefore ensuring your company’s financial accounts are up to date and compliant with any recent legal changes. This prevents your company from getting into any trouble with the law, saving money and time.  

  1. Increased efficiency and productivity

Manual bookkeeping can be time-consuming and prone to errors. By automating your bookkeeping process, you can actually save time and reduce the risk of mistakes. This frees up time and resources that can be better spent on other areas of the business.‍ Another tip for this is to always seek for professional help early before you hit the wall.

  1. Enhanced Decision-Making

Good bookkeeping and accounting practices provide you with necessary information to make informed decisions about your own business. By regularly reviewing the financial reports, you can easily assess performance, identify trends, and make strategic plans for the future.

  1. Better Relations with Banks and Investors  

Having organised and detailed financial accounts allows you to improve business relations with your investors and shareholders. Additionally, if you are in good financial standing, banks will be more accommodating to provide you with more affordable loans, making it easier for you to cover large expenses.  

  1. Stress-free Auditing

Producing financial statements is much easier and faster when you have a superior data-recording model. This permits auditors to have a much easier time conducting an audit and spotting any mistakes than if your accounts are messy, disorganised or even slightly outdated.  

Choosing an Accounting and Bookkeeping Services

As you have seen, there are almost no drawbacks of adopting good quality accounting and bookkeeping practices for you and your business. The bright side is that you can always count on a trustworthy and highly experienced service team like Sprout to help you with it.

Good accounting and bookkeeping services support your business’ growth, by improving existing financial frameworks, keeping track of countless bills, and offering feasible business improvement solutions. It is safe to say that your company will be in good hands. Get connected with us today to witness the change.