Reasons why bookkeeping is important in a business

Every business irrespective of size has lots and lots of hidden costs all of which need to be “captured” and “noted” in a book.

13/02/2020 - Well, bookkeeping is required not because the rule book says so or the not-so-friendly tax officials say so; well that too, but bookkeeping is required to know in which direction the business is heading. Confused? Dont be, this will be explained right away.

A business, whether corporatized or not, big, or just a single person run entity known as sole trader or sole proprietor, needs to know whether the business is staying afloat or sinking. One might think that is easy; because at the end of the day, if theres money in your pocket you have succeeded right? Well, as the saying goes, this is much deeper than that.

What bookkeeping really is about:

It is about the numbers and no; we dont mean the betting game. Every business irrespective of size has lots and lots of hidden costs all of which need to be captured and noted in a book.

Say you went to the mayors office (or not), to get a form seeking to start a business. You might not think much about it but; if you did not walk to the mayors office, there probably was some money spent in terms of fuel for your vehicle or, maybe you had to get yourself a bus or train ticket Service because the mayors office was at the other end of the town or city you live in.

This money spent for starting your enterprise must also be noted down and ultimately, deducted from the revenue that the business enterprise will earn.

So, all costs, big or small, hidden or visible needs to be written down and deducted from the revenue the business earns. Some of these expenses can de deducted before close of the accounting year while others, can be deducted over a period of time.

Bookkeeping is the how of it.

How do you make a note of all the expenses or revenue (income) earned by the business? Jotting down every single expense or income sums it up but; and heres the boring but important part, there are government and tax department stipulated rules to it.

Never mind the Hollywood films showing gangsters noting down sales in a little book. Income and expenses just cant be noted down that way. They need to be noted in a special way known as bookkeeping and in special books known as the bank book and the ledgers. These can be physical; as was a decade or so ago, or, as is done these days, in a computer.

Since you probably know nothing of bookkeeping or these bank books, ledgers or government rules that we write of, you might be wondering how to proceed.

Yes, there are apps you could download. Theres an app for everything these days. But these apps or Online Bookkeeping software will not do the bookkeeping by themselves; they need to be fed the numbers and again, theres a how to it as well. So, the long and short of it is that, it isnt easy.

So, what happens to your dream of starting or running a business enterprise? Youre probably thinking you will have to hire an accountant. No, dont do that because in the long run, with salaries, bonuses and entitlements, it will prove expensive.

Instead, hire professional virtual staff. Visit and you can hire staff on the go for specific jobs. Yes, these staff sit in a distant country but thanks to modern internet, they might as well be sitting right next to you. Makes sense right? Ultimately, bookkeeping is not just about crystalizing the numbers, but also bring into focus how the money was spent and earned and whether monies earned really exceeded the expenses; that is the ultimate gold nugget hidden in bookkeeping.<

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