Why Data Recording Is A Core Part Of Business Accounting Services?
Data recording is inevitably an important part of the accounting process. As a matter of fact, it is the first step. It is the foundation to having a successful business. The future projections of your business hinge on its daily data records.
As business owner, you do not want to look back and not be able to determine whether you have made profits or not. How would you be able to do that if you do not keep proper records of your business? There is no way to monitor the cash flow (money coming in and money going out) of your business. You can see already how detrimental a poor business data accounting is to your business.
As a business owner if the UAE planning to outsource the accounting duties of your business, you should be considering an accounting firm that has all it takes to handle every detail of your business transactions.
The Bookkeeper fits that description.
With years of experience in the accounting business, The Bookkeeper has a team of experienced professionals that are updated on the latest IFRS frameworks and other accounting requirements for your business.
As a business owner if the UAE planning to outsource the accounting duties of your business, you should be considering an accounting firm that has all it takes to handle every detail of your business transactions.
The Bookkeeper fits that description.
With years of experience in the accounting business, The Bookkeeper has a team of experienced professionals that are updated on the latest IFRS frameworks and other accounting requirements for your business.
Bookkeeping
Accounting services generally include working with recorded financial data. The process or act of recording daily transactions of a business is known as bookkeeping. There transactions include sales, expenses, cash and bank transactions, which are recorded in a ledger or journal. Starting off a business, you need to realise that the accuracy of the information recorded in this ledger is pivotal to the finances of your business.
The person in charge of the daily recording of these transactions is known as a bookkeeper. Bookkeeping and accountancy are interrelated. While bookkeeping focuses on recording transactions accurately, accounting involves classifying, analysing, and reporting of the data generated by the bookkeeper. You see, the accounting process cannot be complete without the function of the bookkeeper.
That is why the duties of the bookkeeper and that of the accountant overlap each other. The accountant can comfortably perform the functions of a bookkeeper, whereas the bookkeeper needs to have a certain level of expertise like attaining at least a Bachelor’s Degree in Accounting. However, due to the rapid advancement in technology, the availability of accounting software now makes it easy for bookkeepers to perform certain duties of an accountant.
Methods of Data Recording
Data recording (properly known as bookkeeping) can be done using two methods, the single-entry, and the double-entry method.
The single-entry
The single-entry is a one-sided system of data recording. Here, data is recorded on only one ledger. The single-entry is usually adopted by small businesses. However, it does not clarify data when it comes to tax matters.
Double-entry system
In the double-entry system, every entry to one account requires a corresponding entry to another account. These accounts are known as debit and credit.
The single-entry
The single-entry is a one-sided system of data recording. Here, data is recorded on only one ledger. The single-entry is usually adopted by small businesses. However, it does not clarify data when it comes to tax matters.
Double-entry system
In the double-entry system, every entry to one account requires a corresponding entry to another account. These accounts are known as debit and credit.
Data recording can be done manually on a notebook, computerised on a spreadsheet, or kept online. Business data accounting can be a challenging task so it is necessary to set up a system that you can operate and use the software that is most suitable for your business. Break things down into straightforward tasks you can easily manage, then access and make updates on a regular basis, instead of letting the work pile up.
The law determines how long data recording must be done for every business. The minimum period for data recording is five years for VAT from the latest update for filing of tax returns.
Ensure that every document containing payment details, receipts, sales, purchases, assets, and liabilities are recorded accurately.
Why is data recording an important part of accounting services?
To discover why data recording is a crucial part of our accounting services here at The Bookkeeper, we underlined the importance of recording data. These benefits are explained below.
Key to business growth
Small business owners need accurate data recording in order to keep track of the progress of their business. These records show whether or not the business is improving and if there is a need to make any necessary changes.
Management and decision making
If you must determine the strengths and weaknesses of your business, it is important to keep a proper record of transactions. With proper recording, you will be able to meet your financial responsibilities such as employee compensation or payments to lenders.
In as much as you know your business more than anyone, data that can be relied upon both by internal and external sources can only be drawn from your records. It is equally much easier to make decisions with proper data recording. Any future improvements or changes will be dependent on recorded data.
Identification of income sources
As a small business owner, the data records you keep will enable you to identify the sources of your income as you will receive money from different sources. You do not want to struggle with separating business from non-business receipts or taxable from non-taxable income.
Financial statements
Financial statements include profit and loss statements and balance sheets (which shows the assets, liability, and equity in the business). Good records help you prepare these statements. Financial statements are vital in dealing with financial institutions or lenders as they will need credible information.
Ease in finding important information
In the case of dispute when it comes to invoicing related matters, accurate data recording can help you locate information concerning the original order.
As a business owner, you can see why business accounting services always integrate bookkeeping in the services they render, and when looking around for one in the UAE, The Bookkeeper should be your pick. The interpretation, classification, analysis, and reports are created by the accountant based on the data recording whilst the bookkeeper, through data recording lay the foundation, then the accountant does the rest of the task.
The Bookkeeper professionally handles the data recording aspect of your business as well as other accounting services such as VAT registration.
Contact Us today for a FREE VAT consultation and Accounting and Bookkeeping Services.