What is Bookkeeping & Why Is It Crucial for Businesses?
Accounting

What is Bookkeeping & Why Is It Crucial for Businesses? 

Bookkeeping is an essential and necessary function for any business to run successfully. Bookkeeping services in Melbourne can provide business owners with a way to minimise the mistakes that often get made with their financial records and instead help to maximise the overall profitability and efficiency of their business. This article will go over what bookkeeping is, how bookkeeping services help businesses, and how you can find a trusted bookkeeping professional. 

What is Bookkeeping?

In its simplest form, bookkeeping is the recording of financial transactions for an individual or business. Bookkeeping is an arm of accounting and aims to provide an accurate record of all financial transactions a business makes. The process of bookkeeping can involve creating source documents for business transactions and operations. These documents indicate where specific transactions or business practices originated from and why. An important distinction must be made between bookkeeping in Melbourne and accounting. Essentially, a bookkeeper acts as the financial scribe and record keeper of a business, while an accountant acts as an analyser of financial records, providing advice to business owners based on their analysis. 

Is Bookkeeping Necessary?

Yes, bookkeeping is a necessary function of every business, as failure to accurately track financial transactions within a business can cause the business itself to collapse. Firms offering bookkeeping services in Melbourne perform an important role in businesses, processing invoices, sending clients receipts for payments, and preparing monthly or even weekly financial reports which can provide the company with insight of its current financial health. Bookkeepers are also authorised to prepare and lodge your business’s business activity statement (BAS). This will influence the amount of taxes your business will be required to pay during any given financial year, and failure to lodge this form can result in severe penalties for you and your business. 

How Does Bookkeeping Help Businesses?

Bookkeepers help businesses maintain accurate and up-to-date financial records which are not only used to influence future directions for the business, but are also necessary for keeping track of your business’ overall financial health. Bookkeeping in Melbourne can be performed by anyone who has certifications and qualifications in bookkeeping and accounting. To provide business activity statements or GST services, a bookkeeper will also need to be a registered BAS agent. To keep staffing and payroll costs down, business owners may choose to outsource their bookkeeping.

How to Find a Good Bookkeeper

Simply searching for the term “bookkeeping services in Melbourne” will turn up a number of results. However, not all bookkeeping services are made equally. You should specifically be looking for a bookkeeper who works in or has experience in your industry. This will make the process much smoother, as you won’t need to translate any industry specific terms or complex jargon that’s specific to your industry before the bookkeeper can get to work. If you’re struggling to find a bookkeeper who has worked in your industry, ask other business owners operating in your niche about who they use to take care of their bookkeeping and accounting needs.

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