Book Keeping is the activity involving the recording of the company financial transaction on daily basis. In this book keeping activity an individual person or the organisation prepare the orderly report of all the financial transactions including the sales, receipts and the payment transactions of the company. Book keeping is a necessary activity in order to keep track of the financial status of company and comply with the legal provisions applicable in it. One question that we need to answer through this blog is that is it really important to do booking for the business. Through the course of this article we will be taking a look at the benefits of bookkeeping for business units.
Tax obligations accomplishment – Every business unit is required to file certain tax returns including the income tax return and the GST returns. In the returns there is a requirement of uploading the details of the various business transactions related to finances. It is not possible for the business unit to remember to all the transactions conducted in the year at the time of filing of the returns thus the proper book keeping helps them to do fill the details easily at the time of filing returns.
Effective Business planning – With the bookkeeping the management can be aware of the exact financial position of the company that makes it simpler for the business units to do adequate business planning. The company can be aware of its exact state and the financial output of the inputs made by it.
Government compliance – Once a company become registered in India it is required to comply with certain mandatory provisions. These compliances may include company registration compliances, tax compliances and many other licenses compliances. For abiding by all these compliances the company might require the proper financial statement that can be made with proper book keeping only.
Ease in reporting to Investors – Every investor of the company is interested in knowing the financial status of the company. With the proper records in place it becomes easier to provide an update to the investors and report them of all the related matters. The balance sheet, profit and loss account and the cash statements etc represent the financial position of the company and make it easier for the investor to take reporting.
Tracking the growth of the company – The book keeping and the preparation of the financial statements helps the senior management in comparison of the financial results of the company over the years. With this the management is able to track the growth of the company in a single year and over some years also.
To conclude we can just that book keeping is a crucial activity in the business that provides multi facets benefits to both the small and large scale industries. It helps them in ascertaining the financial position of the company and improving it in case any action is required to be taken.