When a business establishes itself, it engages in numerous transactions along its journey. Some of these transactions hold significance, while others may constitute erroneous decisions. The process of accounting aids management in understanding the various conducted transactions. However, to effectively conduct the accounting procedure, management must record all business transactions. This is where Bookkeeping comes into play.

Bookkeeping is the process of recording all financial transactions made by a business. It falls upon the bookkeeper to record, classify, and summarize all business transactions for further use.

Many people mistakenly equate the processes of Bookkeeping and Accounting. However, Bookkeeping is a subset of the Accounting Function. In Bookkeeping, it’s imperative to record and classify all business transactions. Conversely, accounting involves analyzing recorded transactions to ascertain the present situation of the Business and derive a future plan.

As we have seen, bookkeeping refers to the maintenance of daily business records. Let’s see why this is essential for any business.

The most preferred method of bookkeeping is the double-entry method. Here, each transaction is recorded twice in the two corresponding accounts simultaneously. Consequently, the total debit must be equal to the total credit to maintain the financial balance of the firm.

As we have seen, bookkeeping refers to the maintenance of daily business records. Now, let’s delve into why this is essential for any business.

• • • Bookkeeping eases the process of company audit
    • It is essential for future forecasting and decision-making
    • It helps to reduce any malpractices
    • It helps in preparing financial statements
    • It provides an easy understanding of inflow and outflow mediums of cash

Bookkeeping stands as one of the fundamental activities, indispensable and irreplaceable. It not only facilitates the proper functioning of the accounting process but also serves as the backbone enabling an accountant to execute their duties effectively. Without Bookkeeping, a business would fail to realize its full potential. Moreover, Bookkeeping is essential for various other services such as Auditing, Tax filing, and more.

As the scale of business expands, the volume of transactions increases proportionally, making it impractical to rely solely on memory. Hence, management must diligently record all company transactions. This practice proves invaluable later on, enabling management to assess the current state of the company by comparing it with past performance.

In today’s era, with the rise of freelancers, adherence to the bookkeeping process is paramount. It empowers freelancers to record all necessary transactions, thereby facilitating the generation of utility and value from their business endeavors.

The importance of Bookkeeping is clear to all of us. There are certain practices that should be followed by the businessmen so that all the financial transactions of the Business are recorded, and they do not face any problems in the future. Some of the good practices for Bookkeeping are:

1. First of all, when starting a business, the businessman should keep all the transactions separate. There are many instances where the businessman operates out of the same books of accounts for his personal use as well as for the Business. This is not a correct practice as this may create confusion in the future.
2. All the expenses of the Business, no matter how small, must be recorded. It is better to have a complete recording of the business expenses so that they can be utilized in the future.
3. As the size of the Business rises, so does the roles and responsibilities of the bookkeeper. At this stage, the management should avail external assistance so that there is no error in the recording of the transactions of the Bookkeeping.

A business has the option of either keeping a separate department for Bookkeeping and Accounting, or it can outsource the particular services to a third party. Consequently, there are advantages and disadvantages of each move for the management. Therefore, it is important that the management understand the need and requirements of the Business and acts accordingly.

Only the companies which have a solid backing or those which do not have to worry about funds will be inclined to keep a separate department for Accounting and Bookkeeping. However, when the Business is growing, and not much funds are available, the management will tend to go for outsourcing the bookkeeping activities of the Business.

There are many advantages of availing outsourcing services for Bookkeeping. These advantages include:

1. It saves both money and time for the company. The company will be able to utilize these resources for the betterment of the company.
2. With better bookkeeping services, there will be a visible improvement in the cash flow of the Business. Since the management will be able to track all the transactions of the business, they will be able to make better decisions for the future of the Business.
3. The accounts of the company include recording all the transactions of the business which will, in turn, help the management while filing for taxation.

Selecting a bookkeeper can be very crucial as even a small mistake made by the bookkeeper can result in a huge blunder as the effect of this mistake will be compounded. Certain things that should be checked before a bookkeeper for the company is chosen are:

1. The reviews of the bookkeeping firm need to be checked as these reviews will provide a fair idea of how the firm works and how effective are their services. The company can check with the former clients too to understand the workings of the company in better.
2. Various bookkeepers have different specializations, and this means that different bookkeepers have different expertise. The management should first understand the requirements of the Business and, accordingly, choose which bookkeeper will be best suited for the Business.
3. The quality of services provided by the firm is rather important for the management to decide whether they should avail the services of the firm or not. The firm which provides the highest quality of services at an affordable price has the best chances of being chosen by a business for outsourcing purposes.

Bookkeeping refers to the recording of financial transactions whereas accounting is the periodic processing of these records for various business purposes like reporting, budgeting, strategy and planning. In a way, bookkeeping is a prerequisite for accounting.

GSPU provides a wide range of bookkeeping services considering a holistic view of business entity types. We deal from the initial to the advanced bookkeeping services. Some of these services include:

• • • Company profile setup
    • Maintenance of bills
    • Maintenance of customer invoices and payments
    • Reconciliation of bank accounts
    • Custom-designed reports
    • Quarterly budget reviews
    • Payroll and tax management

A business entity has a mandated rule to follow the bookkeeping and accounting service according to law. Now, at one point it becomes a necessity to evaluate these recordings based on certain parameters for any organization so as to know the level of their performance and stability.

We at GSPU evaluate the bookkeeping services on the basis of cost, income and expense categorization, payroll, tax service, software used to maintain the book of records, customer service provided by the business entity,e.t.c.