Importance of Proper Bookkeeping and Accounting

Importance of Proper Bookkeeping and Accounting

Bookkeeping involves the detailed recording of all financial transactions of a business, from its incorporation to date. It is about record-keeping of incoming and outgoing transactions, such as sales, expenses, cash, bank transactions etc. supported by a receipt, invoice, or other relevant records.

A bookkeeper’s responsibility is to maintain these records in a general ledger and classify each transaction based on its nature. After each financial year, an accountant will refer to the books managed by the bookkeeper to prepare the financial statements.

Proper bookkeeping and accounting are imperative for long-term business sustainability.

Detailed and Up-to-date Records

Businesses that prioritise bookkeeping can comfortably retrieve detailed and up-to-date financial data when needed. Access to such data will ease the preparation of financial statements and the tax filing process, reducing significant time and monetary costs. Regular bookkeeping also acts as a measure to detect business losses, internal theft and fraud.

Businesses can develop good bookkeeping practices through meticulous recording habits and strict schedules. An effective bookkeeping system has appropriate internal controls and processes to ensure company ledgers and books are maintained and well-organised.