Bookkeeping is an important task that is often taken for granted by business owners - some out of ignorance or some by simple negligence.

Bookkeeping is the process of recording of all financial transactions in any kind of business whether you own a small, medium, or large enterprise.  Accountants generate reports out of the books that were properly recorded by the bookkeepers.

Bookkeeping is essential to any kind of business because of the following reasons:

1. Profitability – As a business owner, you want to see if your business is earning and properly recorded transactions can provide this information.

2. Cash Flow – Bookkeeping includes recording of cash receipts and cash disbursements. A complete recording of these transactions will let you know if you are running on a positive cash flow or a deficit, therefore avoiding messing up your bank accounts.

3. Monitoring Payables and Receivables – Bookkeeping helps you monitor how much you owe your creditors and how much money are still collectible, thereby avoiding insolvency issues.

4. Bank Reconciliation – It makes it easier to do the bank reconciliation if all financial transactions are recorded accurately and on time.

5. Tax Preparation – Your accountant or tax preparer will be happy to prepare your tax return if you have ample bookkeeping records and you’re not just basing it on your memory.

6. Saves Taxes – Since basis of tax is net taxable income, therefore, an inaccurate recording of receipt as income or failure to record a deductible expense will make your tax due larger.

Who can do the bookkeeping? Medium and large businesses usually hire their own bookkeepers

as their employee. Many small business owners, on the other hand, outsource their bookkeeping requirements because they want to save on employee benefits, cost of maintaining their own equipment and in order to focus more on their core responsibilities. Others make use of bookkeeping software. However, even though there are available bookkeeping software, knowledge of bookkeeping is still necessary to correctly record the transactions and only a skillful and trained bookkeeper can do this. 

Whatever choices the business owner makes with regards to bookkeeping, the bottom line is to answer the question –“Are my transactions properly recorded?”

- We are CPAs, tax accountants, tax preparers, business managers and consultants based in Torrance, CA near Los Angeles & OC, serving the entire U.S. See us at Yelp & Facebook. Call us (424) 278-4838 or e-mail us at This email address is being protected from spambots. You need JavaScript enabled to view it. .