Book-keeping is an art of identifying, approving, sorting and record-keeping company’s financial transactions in a manner that they can be retrieved and presented for the higher management reporting.
It is the process of recording financial transactions of business daily. It is a part of accounting process that records the financial affairs of the company in the form of journal entries. It is a means of entering data into the accounting system. Therefore, accurate, reliable and complete book-keeping becomes a significant source of information for any business. SAAAR Wealth Advisors is known for providing the best accounting and book-keeping services in Delhi.
Components of Financial Statements that every business should maintain:
There are several crucial Financial Statement components that every business needs. It’s not just a compliance concern; they are vital tools to understand your business’s performance and financial health. The components of Financial Statements are as follows:
1: Income Statement
An Income Statement is a snapshot of the business’s income and expenses during a given period of time (e.g., quarterly, monthly, or yearly). It shows the organisation’s profitability and tells how much money the business has made or lost.
2: Balance Sheet
A Balance Sheet shows a business’s financial standing at a single point in time by displaying its assets, liabilities and capital. It shows the current value of a business, and by looking at the Balance Sheet, one can understand if the organisation can meet its financial obligations.
3: Notes to Financial Statements
Notes to Financial Statements give greater context around the information contained in your financial statements. For example, the assets may be listed in the Balance Sheet, but the notes to financial statements will precisely explain those assets, such as the depreciation charged on them, the components of those assets, etc. The information in this document is required to ensure that the business complies with standards and regulations.
4: Cash Flow Statement
A cash flow statement indicates the sources and utilisation of cash for a given period of time. The cash flow statement informs investors and creditors about the solvency of the business, where the business is receiving its cash from, and where it is spending it.
5: Statement of Change in EquityThis document shows the changes made to a company’s share capital, retained earnings, and accumulated reserves. For a sole trader, it shows changes to the owner’s equity. For a partnership firm, it shows the changes among the partners’ equity. In the case of a company, the statement of change in equity shows how equity share has changed among all the shareholders.
If you don’t know how to prepare the statements mentioned above, you can go for accounting outsourcing and hand over the responsibility of maintaining the books of your business to a trustworthy accounting firm in India that can provide you with expert accounting outsourcing services. If you are looking for the top accounting firms in Janakpuri, you can approach us, as we are one of the best accounting outsourcing companies in India and would be happy to serve you with the most satisfactory Accounts outsourcing services in Delhi.
Importance of Book-keeping
- Organised Accounts:
An organised record of financial transactions plays an essential role in tracking their income/revenues and expenses.
- Timely Preparation of Financial Results:
With book-keeping, it becomes simple to prepare the financial statements, i.e., Profit and Loss Account, Balance sheet, Cash flow statements and Fund flow statements.
- Better Overview of the business:
Book-keeping provides an overview of the business from time to time and therefore, helps firms to examine their present situation.
- Future Planning and Action:
Book-keeping is the preparation of systematic accounts, which helps the businesses to shape up their future budget.
- Better Decision Making:
Book-keeping services are a must for analysing the financial data. They help in making profitable decisions.
- Better Growth:
A business can grow, if you analyse the growth and profitability by tracking the financial records, which can be only proposed by the right book-keeping.
- Better Financial Management:
Book-keeping provides better answers to the questions such as where the organisation spends money, to whom it pays, outstanding dues, outstanding payments, etc. It helps the organisations to manage their finances properly.
- Goal Planning:
To adhere to the goals, organisations need to concentrate on the result- achieving process along with the deviations.
- Tax Planning:
The books of accounts managed effectively and efficiently can help in a detailed analysis of the financial transactions, which can be used for tax planning.
- Audit of Accounts:
Book-keeping provides well-defined and periodical data to the auditor by maintaining proper books of accounts which saves the auditee from any adverse remark in the audit report.
- Legal Requirement:
The law requires the businesses to maintain the books of accounts on a regular basis, it becomes imperative for the organisations to opt book-keeping services.
Benefits of Accounting & Book-keeping
- Saves time
- Better accounts receivables and payables management
- Improves data security
- Minimise risk
- Reduces overhead cost
- Better decision making
- Improved work quality
- High level of accuracy
- Increased profits and growth
Accounting and Bookkeeping at SAAAR
Appropriate book-keeping is decisive for keeping track of the financial performance of the organisation. It facilitates the management to make informed decisions knowing how the organisation is performing and what corrective actions are required.
At SAAAR, our book-keeping services endeavours at cost reduction and cost management for our clients. A specialised and experienced team of accounting professionals have been assigned to cater to customer’s requirements and provide the finest accounting outsourcing services India. . If you are seeking accounting services in West Delhi or a good Bookkeeping outsourcing company or accounts outsourcing services in India, we, being one of the best accounting companies in India, can serve you better in book keeping with systematically managing your accounts and providing you with exemplary accounting services in Delhi.
Frequently Asked Questions
- Why is it important to outsource bookkeeping to a 3rd party?
Outsourcing bookkeeping to a 3rd party has many benefits. Primary among these benefits is preserving the integrity of the books.Beyond that, outsourcing bookkeeping to a professional help to ensure that your compliances are met in a time bound manner. Also, most importantly, by outsourcing bookkeeping, you have more time to focus on the day-to-day operations of your business.
- Are Accounting and Book keeping the same?
They are not the same, but they go hand in hand, and both are extremely important for every business. Bookkeeping means recording financial transactions, whereas accounting refers to analysing, interpreting, reporting, and summarising financial data.
A bookkeeper will assist you with recording financial transactions, compliances, and lodgements that keep your business running smoothly. At the same time, an accountant will analyse the data produced by your bookkeeper to minimise error and omissions.
- Should all the businesses maintain books of accounts?
Yes, all businesses must maintain books of accounts to estimate their tax liabilities, better decision-making, prepare financial statements, and comply with the legal requirements (if applicable).
- What is accounting software?
Accounting software is a computer program that helps in recording and reporting an entity’s financial transactions. It has different kinds of modules through which it works, such as General Ledger, Account Receivables, Account Payables, etc. It helps perform and understand the calculations easily and analyse the financial information. Examples of accounting software include Tally, Busy, etc.
- What is the difference between the accrual and cash basis of accounting?
The key difference between cash and accrual basis of accounting lies in the timing of when transactions are recognised and recorded in the books of accounts.
Under the accrual basis of accounting, transactions are recognised and recorded when they occur, even if cash is not received or paid. While under the cash basis of accounting, transactions are recognised and recorded when cash is actually received or paid.
Cash-based accounting is easier, but accrual-based accounting portrays a more accurate picture of a company’s health and financial performance.
