Importance of Bookkeeping and Money Management
Alternatively, it refers to the technique of recording an organization’s financial accounts. The transactions that are recorded include purchases, sales, receipts, and payments by a person or an organization or corporation. The universally recognized types of bookkeeping are single-entry bookkeeping system and the double-entry bookkeeping system. A bookkeeper mostly records daily transactions of business.
Financial advisors do recommend businesses owner to keep record of their financial transactions due to the following reasons. When a company keeps a record of its financial transactions, and it becomes easy to keep track of its finances as opposed to the one that does not. Besides, it provides systematic up to date follow-ups and on time payments of goods and services provided by the suppliers. When a business properly manages its finances and records all of its financial transactions; it becomes easier for it to keep track of the receipts and other documents which will be later use in the computation of taxes. In addition tax return computation becomes easier more so when organized in a balance sheet, profit, and loss account as well as cash flow. Besides, the process of reporting the business progress to investors on crucial information becomes easier through bookkeeping and money management. A business that incorporates bookkeeping and money management strategy Is in a better position to plan its strategies well and also keep records of its transactions as required by law.
For an individual, money management provides security of being in the know of the resources that one have to counter unforeseen expenses including being fired from work, car breaking down and other unexpected expenses. Bookkeeping and proper money management helps in lowering stress and conflict. As your incomes grow, your financial planning will not just involve budgeting so that all the expenses are covered each month, but also determining how to invest the surplus that accumulates above what you spend. In addition, proper money management helps an individual to achieve long-term goals like buying a house and starting a family as well as saving for all the things they hope to do someday. People who properly manage their money are in a better position to meet their needs, for instance, one can pay the school fees of their children as well as meeting the medical bills.
If you want to check your finances, it is advisable to follow the following bookkeeping tips. First and foremost, you need to be familiar with the accounting software such as QuickBooks. In addition, one can choose to consult a local bookkeeper who will offer the services they need, and turn the books over to a certified public accountant for planning and tax preparation at the end of the year. On the other hand, it is advisable to keep personal and business bank account and credit cards separate so as to make bookkeeping much easier.