Bookkeeping is a process that refers to the activities of organizing and storing financial and business accounting documents, including ledgers, journals, financial statements, income tax records, and more. Bookkeeping is not only sufficiently emphasized when the company is large-scale, but also needs to be applied to the company when it is still small-scale so as not to be dragged down by the failure to know the financial problems correctly and avoid miscalculating the amount of tax that must be paid. With good bookkeeping from the start of a business, a growing small business will know and have healthy financial strength. Below are a few reasons why bookkeeping is important for the success and development of small businesses.
In 2017 noted that as many as 19,304 companies had been involved in tax reporting issues that did not match the official income received by the company. Of the total number of companies that have problems with tax reporting, claims that 76% of reporting errors are given by small and medium scale businesses. Why does this happen? Most likely due to the tax reporting error is a poor accounting process from the start of the business so that it does not have accurate data on income and expenses while the business is running. To avoid this, it is very important to have good record-keeping with good bookkeeping.
Because self-employed small business owners are most at risk of receiving audits, proper bookkeeping is more important than ever. The more accurate and up-to-date your company books are, the faster auditors can move away from your case, leaving less time to worry, and more time to truly grow your business. An audit can be very time-consuming from preparation to the end, so with complete and up-to-date bookkeeping, the risk will be avoided. We all know that cash flow management is not an easy task. Proper bookkeeping allows you to analyze and manage cash flow so that you can see a more accurate picture of your business’s financial situation. Besides, through good bookkeeping, you will always know exactly where your money has been spent. Companies that have good financial control and financial conditions are always in good standing, making it easier to get business partners.