Accounting and Bookkeeping Servicesby Tina Singh Professional Content Writer
The process of systematically recording, interpreting, and reviewing the transactions that are made by a company during a financial year is known as accounting and bookkeeping. The account records are required for the calculation of taxes and both the documentations are required by the Income Tax department at the time of tax filing.
Every business has a legal obligation to keep the account and finance records with utmost detail and accuracy. This information is required by management, investors, and regulators and is a necessity if you are going through acquisition or investment processes.
Established companies usually have an internal accounts department that keeps track of all the financial transactions related to business operations. Small and medium sized enterprises often do not have a well-structured accounts department making the tasks of keeping up-to-date accounts rather difficult. Such businesses require external accounting and bookkeeping services to keep the operations running smoothly.
Importance of Accounting Services:
Immaculate financial records can help the business owner gain insights that subsequently help in refining and improving the various business processes. Not only does one get to differentiate between necessary and unnecessary expenses and curtail them, but also get to do better budget planning for the upcoming financial year or quarter. A proper and detailed accounting of a company’s finances plays an important part in:
- Budget Planning – Detailed accounts help in stringent budget planning as you can weed out the unnecessary expenditures and plan for better finance utilization. You also get to mark areas where a moderate expenditure would suffice and make policy changes accordingly.
- Performance Evaluation – The inflow and outflow of cash will give you an overview of how well your business is doing and where you really need to put the focus. These reports can be further bifurcated according to the departments to know which departments are the most profitable for you.
- Cashflow Management – Continuous tracking of the cash flow will help you realize trends in sales and expenditure giving you time to plan better. You can also then make timely payments to suppliers and staff or arrange for more suitable payment options.
- Information for Stakeholders and Investors – Your financial statement is the defining metric when you are approaching borrowers, banks, creditors, and potential investors. Such business entities invest money in businesses that they deem profitable and detailed accounts will help them make their decision faster and with a higher chance of it being in your favour.
- Tax Filing – The Income Tax department and the registrar of companies require a strict and detailed income tax payment records at the end of each year. The companies may end up paying taxes in excess in the absence of the financial records. Proper financial records not only save you from such a blunder but also help you find areas where you can actually get tax rebates.
Why Third-Party Accounting and Bookkeeping Services is Important:
Accounting and Bookkeeping service providers have a specialised team of advocates and legal experts along with payroll specialists, and accounting professionals. They offer several advantages such as:
- Financial Consultation – The bookkeeping services providers also offer the services of their financial professionals and chartered accountants that provide basic financial consultation according to your company’s requirement.
- Stringent Bookkeeping – The process entails the proper recording of all financial information and transactions on an everyday basis.
- Accurate Monthly Reports and Annual Financial Statements – Financial health of the company is of utmost importance to the investors and creditors. The financial statements of the company help the investors and creditors gauge the safety and profitability of their investments. Accounting firms maintain these records for you and keep them updated.
- Designing Invoices – Invoices are designed to establish your legal rights in case the customer fails to make the payment of the cost incurred.
- Tax Planning – The accounting and bookkeeping services providers also offer tax planning strategies designed by taxation experts in accordance with the requirements of your company.
New businesses and start-ups don’t often have a formal accounting and bookkeeping department that puts them in a difficult situation during fundraising and filing taxes. A detailed record of the financial transactions along with all the bills, vouchers, and receipts for the last eight years is mandatory to be maintained by every organization according to the Companies Act. It’s a better choice to contact a specialised firm to maintain their records.
Specialized law firms like Vakilsearch have teams of experienced attorneys, lawyers, and legal experts along with bookkeeping and accounting teams. So, you get the benefit of a basic legal consultation regarding your business expenses and tax management along with the complete management of the accounting process of your business.
These companies generally offer their services at a far lower cost than having a team in-house. You also get detailed reports about the activities being performed along with the assurance of higher quality due to their rigorously designed accounting and bookkeeping services.
Created on Jan 24th 2020 01:05. Viewed 315 times.