India stands as one of the fastest growing economies in the world. As an emerging market, the requirements and compliances in the country are getting crucial for further development.
The country has gained major importance by the campaigns like “Make in India”, “Skilled India”, “Digital India” and many more. The number of international companies attracted towards India by these campaigns is commendable.
However, with the increase in growth rate and introduction of various start-ups, there is a concern associated with statutory compliances. The complex tax structures are important and should be followed to prevent legal issues. It also helps in the betterment of company and society at large.
The economy is flooded with start-ups and foreign companies coming in the country. But compliances of these remains at a critical stage. The promising market is seen as an opportunity by rest of the world.
However, the need of bookkeeping system with the changing and fast-growing economy is at rise.
What is Bookkeeping?
Bookkeeping can be briefly described as the act of recording business transactions in a system. There can be two ways of recording these transactions, namely: cash basis and accrual basis.
The bookkeepers who manages the entire system are the individuals. These individuals manage all the financial data related to incomes, expenses and investments of the company.
With the help of bookkeeping, companies are aware about their financial transactions. A company without bookkeeping cannot keep a track of its income, expenses or investments.
Bookkeeping helps a business to measure their growth. Hence, it is crucial for a company to adapt a bookkeeping system that suits the nature of business.
Importance of Bookkeeping
The tax structure and statutes in India are challenging. The awareness of compliances and statues are increasing with the increase in number of companies.
Bookkeeping has several advantages for the company and the society. It can have immeasurable positive sides for the entire economy. Let us now have a brief look at the importance of bookkeeping.
Financial Planning Made Easy: A properly planned structure gives a brief overview about the finances. With proper bookkeeping, companies can plan their finances in a better way. Planning such as reducing the current expenses or the amount of non-performing assets within the company can be ascertained and worked on.
Maximize Expenses: A proper bookkeeping system enables a company to maximize expenses and reduce the tax obligation. It gives an opportunity to showcase the actual expenses on timely basis. Recording transactions accurately can benefit the company in increasing profits.
Tax Obligations: Proper bookkeeping enables fulfilling tax obligations correctly and accurately. It saves your time for calculation and ensures timely payment of statutory taxes.
Funding: Funds are the backbone of the company.Bookkeeping helps creditors in assessing solvency of the company. It helps the investors to know about the creditworthiness of a business. Investors invest in a company with high creditworthiness. The bookkeeper and management should be aware and evaluate funding needs of the business.Also, the investors should be presented with accurate financials in a short time.
Reporting Investors: Every business has their duty towards investors and shareholders. Bookkeeping system allows you to generate the reports just by a single click. Whatever the need may be – charts and graphs can easily be obtained from the books of account.
Law Requirement: It is a known fact that the law requires taxes to be paid on time. No one would want to invite a legal issue by not binding to law. It is a statutory duty of all citizens to pay tax timely and accurately.
Saves the Business from Penalties: With the increasing number of businesses, the rules and government conducts have become harsher. For a business to be away from high penalties, timely payment of taxes is crucial. This aim can be achieved by regular bookkeeping.
Bookkeeping management system is a critical part of any business. The two parts of laws: central and local has different requirements that needs to be followed by a business. Overall, the policies of tax systems and the statues in India have been liberalized since several years.
In case a business fails to adhere any compliance, it may experience some serious consequences. However, bookkeeping is always beneficial for a business to achieve its targets. It helps in keeping an eye on all the monies that is coming in and going out of the business.
It’s time for us to grow together with proper bookkeeping system.
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