Any business with a smooth operation gives recognition to good bookkeeping and accounting. While these two are related business functions, they are also interdependent from one another. But often, these are interchangeably used, which results in financial mismanagement.
To shed light on this, the difference between bookkeeping is about recording all business operations and financial transactions (purchases, payments, receipts, etc.), while accounting is all about analyzing and summarizing all the recorded data. When a company has a good record-keeping and accounting system, they are helped in various ways:
Monitor Company Growth Rate and Profit
A comparative study between the previous and the current year records is done to foresee a company’s performance. Financial records and tools like an audit book, a bookkeeping app, and purchase reports will be a handy best friend.
Enable Budgeting ang Planning
An organization’s objectives are always achieved by a careful budget allotment and adequate planning with accounting reports. These reports help businesses in the process of decision-making and development of policies to increase competence.
Prepare Authentic Financial Statements
Big or small companies alike will agree that authentic proofs of financial statements help in managing a business. These documents should be ready anytime, anywhere when there is a need to review a company’s financial standing.
Track Deductible Expenses
Maintain a healthy cash flow by tracking business expenses. Categorize the business from personal spending; this will help an organization qualify for tax deductions and lower the overall tax rate.
Avoid Interest and Penalties
Look for small business accounting software to help avoid interest and penalties. When financial documents are in good order and a ready file, it is easier to see the right amount when the payment deadline comes.
These are just five of the various ways we are talking about, so take a look at this infographic to know more of the advantages of good record keeping and accounting.