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A startup is an organization that is under control of one or more entrepreneurs and aims at bringing a new product or service to the market. In most cases, founders fund initially for setting up a startup. They invest a substantial amount of time and money in research. Mostly, young entrepreneurs are involved in the process. So, since the startups don’t have a strong background at the initial stage of operations, bookkeeping becomes important for them.
Bookkeeping is the process of recording financial transactions of a business on a daily basis that include sales, purchase, receipts, payments. It is a part of accounting that records financial affairs of the business in the form of journal entries. It is basically a means of entering data into the accounting system. Therefore, accurate and complete bookkeeping becomes a major source of information for any kind of organization including startups. However, many times it is seen that startups do not consider Accounting & Bookkeeping services an important task in the initial stage of operations and in order to avoid extra cost, they ignore the concept of bookkeeping.
An organized record of financial transactions undertaken by startups plays an important role in tracking their income and expenses and it can be achieved only by bookkeeping.
With bookkeeping, it becomes easy to prepare the financial statements (Balance sheet, Profit and Loss Account, Cash flow and Fund flow statements).
Bookkeeping provides an overview of the business from time to time and therefore, helps startups to analyze their current situation.
Bookkeeping is about the preparation of organized accounts, which in-turn helps the startups to plan their future budget. When proper accounts are maintained for each and every period, financial transactions become transparent. All the money earned or spent becomes clear. startups prepare an action plan for spending their money accordingly.
When startups opt for bookkeeping services, they do it to analyze the financial data like income, expenses, profit margin, sales, purchase, vendors details, taxes, etc. They analyze this data and make decisions that are profitable for them. They can respond quickly as per market demand if they know their financial position.
For startups, it’s very important to track their growth as they are in their initial stage of operations and they are investing a substantial amount of time and money. So, bookkeeping provides them detail with regard to profit and growth. A business can only grow if you analyze the growth by tracking the financial records, which can be only provided by the accurate bookkeeping.
Bookkeeping provides better answers to the questions like where the organization spends money, to whom it pays, outstanding dues, outstanding payments, etc. Hence, it helps the startups to manage their finances properly.
To meet the short- term and long- term goals, startups need to focus on their strategies and track their results. This is only possible if bookkeeping is done.
Every organization is required to pay taxes in the form of income tax and indirect taxes like GST. They are required to file Income tax returns and GST returns as on due dates. For this, they need detailed and accurate information on exact profit, sales, purchase, etc. Here, startups get the information from the accounts maintained and in this way, bookkeeping helps in the computation of both the forms of taxes. Also, the books of accounts maintained help in a detailed analysis of the financial transactions, which can be used for tax planning.
During the audit of books of accounts, bookkeeping becomes important because it provides clear and periodical data to the auditor. Also, the questions raised by the auditor can be properly answered if the auditee maintains proper books of accounts. This saves the auditee from any unfavourable remark in the audit report.
When the law requires maintenance of the books of accounts for a business, it becomes necessary for the startups to opt bookkeeping services.
When startups opt for good bookkeeping services, they can focus on their strategies and goals rather than focusing on the maintenance of books of accounts. Their work gets reduced to verifying the details of financial transactions recorded and analyzing the results.
When proper accounts are maintained, it becomes easier for the startups to apply for loans from banks or financial institutions as they can rely on the books of accounts prepared and can assure re-payment within the time prescribed.
Timely bookkeeping is key for keeping a track of the financial performance of the organization. It enables the management to make informed decisions knowing how the organization is performing and what corrective actions are required. So, startups should not overlook the importance of bookkeeping as it is a measure of business performance in terms of money and not a burden.
Bookkeeping is a formal method of recording all the financial transactions of a business during the complete financial year. Bookkeeping includes all the transaction such as Sales, Purchase, Payments & receipts, expenses during the financial year. Bookkeeping is generally done by a professional bookkeeping services provider.
Lawgical Station is one of the professional bookkeeping services provider in India with one of the finest & experienced professionals on board. Choosing Lawgical Station will give you an edge over others in the market because we ensure:
We ensure the complete secrecy of data of our clients, since we understand the sensitivity of data. “Bookkeeping is not about business, it’s about trust”
Yes, it is completely safe to find an online bookkeeping service provider and get your books of accounts safely handled by them.
The process of online bookkeeping services are very easy, that you just need to find a suitable bookkeeping method to prepare and preserve your books of accounts.
There are various reasons which justifies that online bookkeeping services outsourcing is a better option than having your own accounts department:
There are different laws under which bookkeeping has a statutory backing to its rules and regulations:
Section 128 of the companies act, 2013 specifically mentions the books of accounts for a period of 8 years immediately preceding the current year.
Section 25 companies which are solely formed as “Non-profit companies” are required to keep books of accounts for a period of not less than 4 years.
Some other books which need to be maintained as per companies act, 2013 are; register of directors/members, register of employees stock options and other securities bought back.
If the sale/turnover from the business or profession exceeds INR 25, 00,000 or the income from business/profession exceeds INR 2, 50,000 in any of the 3 preceding financial years, then it becomes mandatory on the part of the assessee to maintain books of accounts.
Section 6F specifies the list of various books which needs to be maintained as per the Income tax act, 1961 viz. Cashbook, general ledger, copy of bills & receipts.
The books should be maintained for a period of 6 years from the relevant preceding year.
yes,online outsourcing of bookkeeping is possible and it is easy, effective and convenient for all the parties associated to outsource their bookkeeping.
yes, Bookkeeping and accounting are two different sides of a coin but one is incomplete without the other. Bookkeeping is related to identifying, recording & maintaining financial transaction whereas accounting deals with the process of summarizing & interpreting the transactions in the ledger format as specified.
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