The Need for Accounting and Bookkeeping Systems
Every new business needs to give some consideration to bookkeeping and accounting and to which systems it will have in place to record sales, purchases, assets and liabilities.
It will also want to know the levels of profitability or the value of losses both cumulatively and for any given period in its financial year.
In order to run an efficient business, the management should have to hand the amounts which have been paid out to suppliers, the value of invoices received but not yet paid, monies expected to be received and the amount of cash in the bank.
Such vital information helps a business plan it cash strategies, assess future funding requirements and can provide a springboard from which to launch cost saving exercises to enhance the stability and profitability of the organisation.
Accounting Systems and VAT
The payment of business taxes such VAT and corporation tax must be based on sound accounting policies and analysis and are a derivative of an accounting system.
The penalties for keeping inappropriate records serve as both a strong deterrent and motivator to have in place a process of recording business income and expenditure in the correct manner.
Computerised Accounting Systems
Many computerised bookkeeping systems exist specifically for the smaller business and do not require any specialised accounting training or prior ledger maintenance experience.
Such accountancy packages can have several distinct advantages over their manual counterparts.