Business is a game of calculation! Business means adding, subtracting, multiplying, dividing income-expenditure and profit-loss calculation. And if it is a small business, then there is no more! Because the biggest challenge of small business is Bookkeeping! If you have a small or medium business you must be an accountant. The more carefully you keep the daily accounts of a small business, the more likely the business will be profitable. To be an accountant in business, you need to know first, what is HishabPati and how important is HishabPati? Then you need to know why HisabPati is so important for small business owners.
So what we will know from today's blog-
What is Bookkeeping?
Bookkeeping is the process of keeping records of any financial transactions of a business. To explain a little more, the process of saving all financial transactions or records of financial transactions including income and expenses of a business in a specific platform or place is called Bookkeeping. This platform can be a handwritten book-book or diary, a computer or cloud-based spreadsheet or a modern accounting software.
Bookkeeping is a big challenge for small businesses!
Large trees are more vulnerable to storms and smaller trees are less vulnerable. We've always heard that, right? In fact, it is true in nature, but it is almost the opposite in business! In case of any unexpected situation or economic storm, the risk of small traders is high, while the risk of big traders is less.
Because, small or medium businessmen do not have the ability to handle the losses that they face in any wrong decision or in any particular situation. As a result, most of the time small businesses are not sustainable. Even if the same situation has little effect on big traders, they have enough strength or backup to overcome it. So bookkeeping becomes very important in small business.
7 Reasons Why ' Bookkeeping ' Is So Important In Small Business
Bookkeeping is very important especially for running a small business. Because your small business won't stay small forever. When you want to grow your business, hire new employees, add new products or services, or open a new store or outlet, you will need records of financial transactions. Where to get the necessary information when making a decision?
Hence ' Bookkeeping ' can play a vital role in running a small business. Let's take a look at why small business Bookkeeping is so important-
01. Collecting and storing accurate financial transaction data:
Bookkeeping allows you to keep records of all financial transactions including income and expenses of your business. When you have all the income and expense information of a business, you can analyze that data. This means you keep financial records so you can work on them later.
Here lies the difference between financial Bookkeeping and management Bookkeeping . Financial Bookkeeping is the recording of business financial transaction data or information, and management Bookkeeping is the interpretation and analysis of those financial data for greater purposes.
02. Budgeting helps to:
A budget is a business management road map. A budget has a complete idea of how cash management will be for a particular period or project.
Bookkeeping plays a big role in creating your business budget. It becomes easy to determine how each sector of the business will be spent. The idea of which sector to cut costs or which sector to increase costs is already available. Because, you have the data of previous financial transactions. And this is where HishabPati will act as a game changer!
03. Decision making is easy:
Through Bookkeeping you will know your income-expenditure and cash flow management . As a result, it will be easy to take decisions about the future steps of the business and what needs to be done to advance the business.
Using an Accounting software will keep records of all your business transactions. When you have the pros and cons of every financial transaction or financial transaction in your business, it will be easier for you to make decisions. This is science, this is Accounting!
04. Setting business targets is easy:
But the calculation is very simple! You know how many sales were made last month, how many sales were made the month before that, what kind of feedback is coming from which party, how any product or product is selling, etc. So it is natural that bookkeeping will help in setting small and large targets for different periods of business.
05. Determination of Profit and Loss Sector:
Every business has profits as well as losses. You can also manage the losses of the business, that means you can turn the losses into profits. But for this you need to know in which sector, at which time or by which party the losses occurred.
With bookkeeping, you are not only keeping track of your business's profits and losses, but you are also able to determine the business's profit and loss sectors. As a result, it will be convenient for you to decide later whether it is necessary to pay more attention to a particular sector.
06. Due accounts will be updated:
It is very common for small traders to have other transactions with customers and suppliers. Getting used to daily bookkeeping in business means keeping track of cash transactions along with balance or credit transactions.
Remembering the daily outstanding balance is not a solution. For this, you need to keep up-to-date through Bookkeeping, then you will see that the amount of outstanding balance will come down a little.
07. Proper bookkeeping in small business means you're ahead:
You are getting all the financial transactions of your business organized in one place and you know everything is on one platform. This will give you peace of mind and any trader will accept this fact!
Proper bookkeeping means you'll be way ahead of ten other small business owners. Because, you keep your business accounts updated daily and can analyze them when needed.
Bookkeeping will also help you with accurate information when you file your government taxes. How big a relief or release it is only those who have fallen into complications while filing taxes will understand!
Let's look at an interesting example to understand the importance of Bookkeeping
As we all know, shepherding is a very well-known profession in Bengal. It may appear that the shepherding profession is very simple, and we know there aren't any problems involved, right? But the interesting thing is, this innocent profession also needs calculations! A herdsman has to keep track of how many cattle he goes to the field every morning and how many cattle he returns with. At the end of the day he has to give his account to the owner.
On the other hand if the owner has 10 milking cows then he has to save the daily expenses, milk production, sales and amount of money. If for some reason the milk production decreases, the sales will decrease and the amount of money will also decrease. What will the owner then do?
The owner can then hold the shepherd accountable. You can monitor whether the cows are being properly fed or cared for properly. In this case, if the owner did not have an account, then the owner would not have caught the lump in the first place. When the matter came to notice much later, the business might have suffered a great loss.
And thus a good Bookkeeping system can give a holistic picture of a business and help you make the right decisions at the right time.
Lastly,
Good news for small businessmen !
There are many good Bookkeeping apps available for keeping business accounts now. The usage rules of some apps are so simple and intuitive that small businessmen can easily manage their business accounts in the apps.
Such an book keeping application isHishabPati.The app is specifically designed for small business owners in Bangladesh. Therefore, its features can play a very effective role in keeping track of your business's daily accounts. Download the HishabPati app today from the Google Play Store and try its basic package for free. If you like you can buy subscriptions for different durations at a nominal price.
Good luck with your business!
