Bookkeeping services are important for the maintenance of financial records of a company. In the corporate world, bookkeeping services help in the production of the true financial position, determination of income tax, and the opportunity to take advantage of tax relief.
An accounting department is a crucial part of any organization and plays an important role in the success of the organization or business. Business people or entrepreneurs should keep records of all their financial transactions such as sales-purchase, or the income-expenditure within the current financial year. From time to time, big and small corporate entities may hire external professionals to complete a number of accounting tasks.
Bookkeeping is a critical component of accounting and may take upon different services that help a business or organization in the maintenance of records of every single penny trickling in or out. In that way, the leadership of an organization will always be aware of the accurate position of the business.
Bookkeeping becomes more important because it is complicated and time-consuming to keep track of all transactions that happen within a day of business operations. Having an efficient bookkeeper is beneficial to the organization or business since there is an individual mandated to take care of every penny.
Importance of Bookkeeping
Bookkeeping is a branch of accounting that is concerned with the recording and maintenance of financial records. Every organization should keep a record of all its financial transactions such as sales, employee payments, bills, purchases, earnings from resources, and all types of expenditure.
The Responsibilities of a Bookkeeper
The following bookkeeping services are carried out in a systematic manner:
- Original bills and receipts are organized in a logical manner to ensure that none is missing. The bookkeeper should produce any of these documents as when required.
- Maintenance of the book of accounts with utmost diligence. Professional bookkeepers are well equipped to deal with all bookkeeping activities even through the use of computer software.
- Preparation of documentation for all tax liabilities and provision of advice towards good managerial decisions. Bookkeeping is necessary for the filing of income tax and trade tax.
Methods of Bookkeeping
- Single-Entry Bookkeeping: Entails the maintenance of a record on the account books in a simple and uncomplicated manner. All financial transactions associated with the amount spent and amount received are maintained as a single entry.
- Double-Entry Bookkeeping: This method is slightly more complicated compared to the single entry method since it entails making changes to the debit and credit accounts after every transaction. With this method, errors in calculations are noted in a very simple manner. The debit account amount and the credit account amount must match. If there is a mismatch between the two, it is evident that an error was made during the entry of records.
Entrepreneurs should know about their expenditure and the sources of income so that they can maximize income and profits to the company. The records of all transactions must be kept irrespective of whether the company is small or big. Since business or company records are private and confidential, it is important that a reliable person is identified to keep records of all transactions. The secrecy of the financial position of a company must be kept properly. A chosen bookkeeping has the responsibility of not leaking or misusing company/business records that may tarnish the company’s image.
To learn more about our tax preparation services please visit https://envolta.ca/services/bookkeeping/ or call us at (613) 567-7088.