Maintaining a good, acceptable bookkeeping/recordkeeping system should not be solely to satisfy the
government. There's no question that the more successful businesses also have more efficient bookkeeping systems in place. This is because a good bookkeeping system can give a business the timely information it needs to increase profit-making opportunities.
1. A good bookkeeping system can help the business answer many important questions such as: How
much business is being done?
2. How much cash is on hand?
3. How much is tied up in receivables, and how old are these receivables? Should credit continue to be extended?
4. Should collection action be taken? What are the expenses by categories?
5. What are the important business ratios that should be analyzed?
6. Are sales, expenses, capital, and profits showing improvement over previous periods? Where is the break-even point?
7. How does this business compare with others of its size and industry?
What is the projected income tax bill going to be, and how can this be minimized? Is payroll at its optimum level, and is there enough cash coming in to meet payroll?
A good bookkeeping system allows the business owner and accountant to create and review important business ratios, profit and loss statements, balance sheets, customized management reports, reconciled bank statements, and required tax return information.