Businesses grow when stakeholders and entrepreneurs know their financial status. They depend on data analysis to make informed decisions that may impact the bottom line of the business. Whether the entity has to hire a new employee or buy new equipment, a business owner needs to look at their financial statements. If they show enough cash, they can proceed further with the plan. In today’s blog, we’ll discuss the importance of hiring a bookkeeper for preparing financial statements.
Why Should You Hire a Bookkeeper for Financial Statements Preparation?
Australian companies have to file their financial reports with the Australian Securities and Investments Commission (ASIC) for each financial year. These reports need to be prepared by a professional bookkeeper in Melbourne. There are a few companies that are exempted from filing reports with ASIC but still need to prepare these documents.
Financial statements offer all the financial details of the company and are usually prepared by professional bookkeepers. Basically, it involves keeping track of all transactions and organising them accurately in the ledger. It helps in determining the amount you spent and earned through a business in a specific time period to reach your company’s goals. Apart from financial statements, bookkeepers are also responsible for the bank reconciliation process.
How do Bookkeepers Prepare Financial Statements?
Bookkeeping services for small businesses are important for running a business because they help you track your business finances. Here is how a bookkeeper helps you prepare financial statements:
- Maintain Financial Records
The primary duty of a bookkeeper is to create monthly financial statements. For the purpose of updating accounts payable and accounts receivable in the books, it is necessary to maintain a record of all supplier and customer invoices. They must keep records of the wages and salaries paid to employees as well as the cost of their inventory.
In order to check for missed entries, calculation errors, and fraud, they must reconcile bank accounts. Specialised professionals committed to financial management can handle all of these jobs. As a result, both small and large businesses employ bookkeepers to keep current records.
- Income Statement Preparation
The income statement is also called the profit and loss statement because it gives data related to the profits and losses made by the business in a specific period. The bookkeeper calculates the total sales generated by the entity after subtracting the discounts. Preparation of income statement includes gross profit generated from selling and buying products.
- Balance Sheet Preparation
Bookkeepers are also responsible for preparing a balance sheet that shows the financial status of the company. It describes the liabilities, assets, and equity accounts of the entity. The assets include the property, assets, vehicles, and equipment owned by the business. They also identify liabilities that are outstanding debts. Finally, they check shareholder equity, the amount invested by the shareholder after subtracting liabilities from assets. The net worth of the company can be identified using a balance sheet.
- Cash Flow Statement Preparation
A cash flow statement is helpful in knowing the cash that flows in and out of the company. Cash flow from operations, investments, and funding activities are all taken into account. It helps the business owner in determining the available funds. It is essential to reduce wasteful spending and boost profitable activity.
Is It the Right Move to Hire a Bookkeeper?
Hiring a professional bookkeeper for your company would mean your financial and accounting requirements will be met with the utmost integrity and professionalism. However, you need to get the right person for managing your business books to avoid making costly mistakes. Find a bookkeeper in Melbourne who is experienced and dedicated to helping you manage your business finances.
The integrity and reliability of financial statements are maintained by bookkeepers because they adhere to industry standards and relevant laws. They assist all internal staff members in making sense of the massive amount of data that has been systematically gathered and updated to provide the most recent and correct information.
Conclusion
The blog shares key points to help you know the importance of hiring a bookkeeper for preparing financial statements for your company. For more bookkeeping solutions, you can get in touch with Reliable Bookkeeping Services provider.