Why is bookkeeping so important?

Bookkeeping and accountancy go hand in hand with each other and a good Accountants Cheltenham like https://www.randall-payne.co.uk/ will be able to provide you with support for both of these key elements in relation to your business finances.

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Bookkeeping essentially invoices the recording, storing and reconciling of the financial transactions for a variety of company types including private companies, partnerships and non for profit organisations as well as charities. The tasks undertaken by bookkeepers prepares the accounts to be in a suitable position for the accountant to complete the year end return and any other high-level tasks that may be necessary. Bookkeeping is about financial recording and accountancy is about the interpretation, classification and analysis of the financial data in order to be able to report to the client and comply with any legislative requirements for HMRC, Companies House and the Charities Commission as well as many other regulatory bodies.

There are two ways in which bookkeeping can be undertaken – single entry and double entry. Single entry bookkeeping is not used often and tends to be for those businesses that have very simple accountant and very few transactions taking place. The majority of bookkeeping that takes place is double entry and this is the mechanisms that most of the bookkeeping software like Xero and QuickBooks are built on.

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Many accountancy firms will use software to record, analyse and report on their client’s financial information. There are many reasons as to why this sort of accounting has become more popular and the benefit of using a software system from the accountant’s perspective include:

  • Creates more accurate recording as the system will flag up any postings that look incorrect and also needs to have all elements completed before it can successful post an item.
  • The use of software also speeds up the accounting process. As long as items are regular posted, and receipts and transactions are kept up to date the accountant can run their year end analysis and reporting much sooner than they would be able to do if they were relying on their clients bringing in paperwork at the end of the financial year.
  • Filing taxes such as VAT are also much easier when completed through one of the many bookkeeping software options available as they integrate directly with the HMRC Government Gateway and take the relevant information from the software to file your report directly for you.

 

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