What is Bookkeeping? Our Guide for Small Business Accounting

Bookkeeping for small businesses is important for financial purposes and business growth. You’ll always need to make sure your books are in order. Find out the answer to ‘what does bookkeeping mean?’, why it’s important and more below.

What is bookkeeping?

Bookkeeping is a big part of accounting for any business but what exactly does bookkeeping mean? With bookkeeping, you keep a record of any business financial transactions, prepare financial statements, and other important business information.

Why is bookkeeping important?

Bookkeeping is important for any business, but especially for a small business. You’re able to track your expenses, income and overall profit which streamlines your business. Accounting mistakes can have financial consequences, which are amplified when you’re a smaller business.

Bookkeeping also confirms your profit figures are correct by ensuring your tax and other financial liabilities are accurate. If you’re self-employed, these tax figures can also change – make sure to check out our article on self-employed tax relief for more information.

How does regular bookkeeping benefit small businesses?

So, how exactly can good bookkeeping benefit small businesses? We’ve listed a few examples below:

1. Saves money

You can avoid penalty charges for incorrect financial information by ensuring your books are correct.

2. Better compliance with government regulations

Similar to the above, you can avoid penalties and other time-consuming tasks by ensuring you’re abiding by government regulations. It also makes sure the auditing process runs smoothly when the time comes.

3. Saves time and avoids panic

By being financially organised, you can focus on other important things. You won’t need to be spending hours wondering where certain transactions came from if you keep on top of it.

4. Accurate finances help you to make better business decisions

You have the relevant information available exactly when you need it. Whether you’d like to cut costs or want to expand an area of your business, having the right financial information can help you to make these decisions and focus on strategy.

5. Ensures company sustainability

If you’re unsure of your business costs, you run the risk of falling into financial trouble. This can cause issues for the way the business runs but also puts the business as a whole at risk.

What does a bookkeeper do?

Bookkeepers help you to summarise your business’s financial findings and provide you with relevant financial information about your business. Bookkeepers can also help you with financial strategies for your business after taking a look at your finances.

Personal bookkeepers at Accountancy Solutions can help give you a real-time understanding of your business. For more information, contact us and you’ll be able to keep your accounts up to date.

What does a bookkeeper do for a small business?

If bookkeeping is something you’d like to do yourself, you absolutely can with the right tools. At Accountancy Solutions, we offer discounted QuickBooks, so you can make sure your books are in order at a reasonable price. Get in touch with the Accountancy Solutions team to find out more.

We hope this article answered the question ‘What is bookkeeping?’ and why it’s important. Next, make sure to check out our article on UK Tax Codes for more financial information for small businesses.