Importance of Bookkeeping in Business
Posted: Jun 16, 2019
For judging the importance of bookkeeping in business you need to have a full understanding of what is bookkeeping? Bookkeeping is an accounting service in UAE and is thus the process of recording day-to-day financial transactions of a particular business. Bookkeeping is also sometimes referred to as the method of recording transactions which involves preparing documents of all transactions, operations and all other events of a business.
Bookkeeping is an accounting service in Dubai that is used in accounting which includes recording transactions related to purchases done by a company, its sales, payments made and last but not the receipts. This accounting service in Dubai can be used by an individual or a firm or an organization regardless of the size of the business.
Moving forward, the method of bookkeeping has existed from the earliest times in human life in different cities. Earlier records were made for temporary use only and the accounting service in UAE was done on a regular basis until the century where technology had taken over manual recording system of accounting.
Why is Bookkeeping important?Financial records, if organized well will help any firm or an individual to analyze the incomes and expenditures that he is getting and doing from a particular business. Bookkeeping as an accounting service in UAE is thus important as it helps with business analysis in a systematic and organized manner. It also acts as a tool for management in order to analyze the performance of the business which in return helps to identify the strengths and weaknesses of a business. It is important to study bookkeeping especially after understanding the money and tax in the UAE.
Moving forward to the importance of bookkeeping, the following points will make the topic clear:
- Maintaining accurate financial records: The first and the foremost reason to use the bookkeeping as an accounting service in Dubai is that it helps to maintain accuracy in the accounting of a business. In the current scenario, where businesses are flourishing with leaps and bounds, there are a number of transactions to be recorded on a daily basis. Having the right accounts maintained properly will help in determining the cash flow in a business and this will further make the process simpler while making the balance sheet. Once you have recorded small expenses efficiently, it becomes easy for analyzing the exact expenditure over the income being received.
- Preparation of Tax: Any tax consultant in Dubai encourages your business to file a tax return every year. There are businessmen who are scrambling through their desks in search of missing paper works. I case it is a condition that you have also faced then you must remember to make the accounts more efficient so that while preparing tax in UAE, it becomes easy for you and you do not have to pay any extra amount from your end. This process of preparing tax in UAE can be made easy by simply having an efficient bookkeeping function within your company.
- Organized business activities: To be organized is a skill that every accounting firm in Dubai should have. It is good to be able to find information regarding business at any time. There are auditors in Dubai who might be interested in your company’s financial records and well in such a case if you have been able to manage all your accounting transactions efficiently then there will be no problem as to display your books to the audit firms in Dubai. Bookkeeping is a process of maintaining the records efficiently and therefore when auditors in Dubai will request you for displaying the books, you must be able to do the same in an easier and well organized manner.
- Accounting Analysis: Coming forward to the analysis of a business, bookkeeping helps to analyze the business transactions. It acts as a tool of accounting services in Dubai to identify the performance of a business organization. Every bit spent in business if recorded systematically will yield better results while analyzing the exact income and expenditures to further know if your business is doing well or not. Auditing companies in Dubai suggest the businesses maintain proper records in the form of financial statements so that the right inflow and outflow of money can be analyzed. Through the right guidance of audit firms in Dubai, you can get the information on which business line is working efficiently and which business line needs amendments.
- Efficient decision making: One of the major areas of any business organization is to take some quick decisions which will be right for the business. It is believed with analyses, comes better decision making. If you need access to the relevant information, it is important for your business to use the best accounting services in UAE. In this scenario, bookkeeping is one of the best ways to get the right information at the right time. This further enables you to take relevant decisions with respect to the working of a business firm. To take all the profitable decisions, it is important for you to access the information related to the finances of a firm.
- Making development plans: Every business organization is established with the motive to grow and develop in the near future and it is important to do planning for this purpose. Bookkeeping displays the past performance of a business entity. In order to make plans for the future, it is important to understand the past and accounting services in UAE will give you the clear image of what exactly works and what doesn’t work for an organization. Bookkeeping not only helps to make strategies but it also plays a vital role in planning tax in UAE.
- Attracting Investors: Another major part of the organization is an investor. An investor wants to know the financial performance of a business in order to make the relevant investment with the motive of earning profits. Financial statements if managed efficiently make it easy to display the right information to the investors. The value of a business is presented through cash- flow statements, balance sheet and income statements. Accounting service in UAE will help the investors to have accessible and up-to-date information right away. The bookkeeping is done not only for the current investors but it is also done for future investors. Provide the right information for the betterment of your business.
- Financial management: Bookkeeping plays a vital role as it allows you to take control of your business finances. Accounting services in UAE helps you analyze how you send money and it also helps you to identify the outstanding invoices owned by your customers or by you solely. Accounting services in Dubai help you analyze the outstanding bills that you need to pay through which you can pay them without any hustle. Also, in case you need to receive payments from your customers then you will have the relevant details and accordingly you can track the amount easily. This delicate inflow and outflow of cash will help your business grow efficiently.
- The necessity for audit firms in UAE: In a country like Dubai, it is really important for a business organization to pay tax in UAE and file a return for the taxes your business is paying to the government. Auditing companies in Dubai encourage you to maintain proper records of all the financial inflow and outflow transactions. Depending on the legal structure, audit firms in Abu Dhabi require you to keep financial records separate from your personal expenses. In case you fail to do so and try to include all your personal expenses during filing a tax return, you will have to face consequences. This might also lead to termination of your business.
- Conduct self- audit: Every individual aim at keeping a daily record f all the financial transactions which will help in analyzing the health of a business. It will help an individual to take relevant decisions related to the business activities. For example: there are decisions to be taken regarding risk management or losses and in the case where all the actions fail, taking and planning decisions and strategies becomes an important aspect for a business person. There are times when corrective measures are required to be taken in an organization therefore, if all the financial do’s and don’ts are clear to self, it becomes easy to take the right decision at the right time. In the case of internal audits also it becomes easy to display all the financial requirements of the auditing firms in Dubai and get the finances audited efficiently.
- Making sure all the deductions are covered: Even one penny can make a difference in the accounting books and in order to balance the sheets efficiently, all the transactions related to expenditures and incomes are important to be noted down starting from the bookkeeping process. Making and maintaining proper records acts as proof while you present your incomes and expenditures while filing a tax in UAE return or while presenting your transactions to the auditing firms in Dubai.
So now that you know the importance of bookkeeping. It can help you save your time, efforts and money and give you less stress in terms of managing the business transactions. In case you are not aware of the bookkeeping process then you can also hire an accountant from any of the accounting firms in Dubai and get started as soon as possible. Once you start implementing bookkeeping in your business daily, you will be able to classify the relevant transactions and give it to the Dubai tax authority or audit firms in Dubai whenever required.
Start managing your accounting transactions efficiently so that you are able to focus on the strategies and do not waste time in gathering minor transactions on a daily basis.