Bookkeeping helps to track profit and loss, expenses, manage invoices and keep true and updated financial records of every business. There are some downsides of bookkeeping that can affect the efficiency and results of your business.
Both the pros and cons of bookkeeping will be brought to light in this article to help you have a better understanding of the practice.
Pros of Bookkeeping
Satisfying Your Legal Obligation
One Key benefit of bookkeeping is that it helps you meet your legal obligation in keeping accurate and updated financial status for your company.
Bookkeeping helps you keep financial records and track revenue and expenses to pay suitable taxes each year which could result in government penalties if you fail to meet such obligations.
Building Accountability and Clarity
With bookkeeping, prices or previous payments made can easily be verified, this helps to improve accountability and clarity.
This accountability extends to business partners who are authorized to access a company’s cash flow since the recent bookkeeping software can warn a business owner on suspecting a fraudulent activity, such as the transferring of a company resource elsewhere.
A Potential investor with interest in a company’s financial status can see a company’s books. This encourages clarity.
Bookkeeping provides accurate and transparent information regarding the progress and financial status of a business thereby allowing business owners to make positive decisions about their business.
Bookkeeping helps to clarify business owners if their business is profiting or incurring loses, thus directing business decisions such as whether closing down a business location or hiring more employees can change the fortune of the business.
Cons of Bookkeeping
Procedures in bookkeeping such as the collection of financial records, organizing, tracking of errors, and so on can take some time even with bookkeeping software.
It also takes a lot of time to maintain the books, examine records, and updating by adding new information.
This time-consuming downside of bookkeeping can inhibit the ease of making financial decisions.
Another downside of bookkeeping is cost. This sad reality is mostly felt by small companies who can barely afford the services of an external bookkeeper. Also, these companies may struggle to purchase the required bookkeeping software or even update them with every new version that comes out.
With a monthly record of your business income and expenditure, QBO gives you the insight that will help you understand your business financial status. You can visit them here: https://goqbo.com/.