What is Book Keeping and Why it is Beneficial?
Bookkeeping is the recording, storing and retrieving of the financial transactions of a company. Bookkeeping in Singapore is a part of the process of accounting in business. These financial transactions include purchases, sales, receipts and payments made by an organization or an individual person.
Bookkeeping consists of several methods such as the single-entry bookkeeping system and the double-entry bookkeeping system. In simple words, any process which involves the recording of financial transactions is a bookkeeping process.
Bookkeeping is performed by a bookkeeper who performs the day-to-day financial transactions of a business and is responsible for writing the daybooks. A daybook contains records of sales, purchases, receipts and payments. A bookkeeper ensures that all the transactions, be it cash or credit transactions are recorded in the correct daybook, supplier's ledger, customer ledger and general ledger. This allows an accountant to create reports from the information concerning the financial transactions which are recorded by the bookkeeper.
Benefits of Bookkeeping
Identifying the Sources of Income
There are different sources from which cash can be deposited into a business account. These sources are customer payments, loans, purchase funds, owner's contribution etc. It will be difficult to prove which sources are non-business or non-taxable if there are no proper records showing the sources.
Proper bookkeeping leads to forgetting some of the deductible expenses and input tax credit (ITC) at the time of income tax return or GST/HST return.
Financial Position of Businesses
Good records make the owners aware of the financial state of their business. The financial reports give a clear idea as to whether their businesses are making money or not.
In The End
Above is a brief description about Bookkeeping along with some of its benefits.