Why must a company have bookkeeping?

There are various reasons why a company is obliged to have bookkeeping and to operate proper accounting.

Functions of Bookkeeping

The main function of bookkeeping is information. Thanks to this information, it should be possible for the company to make decisions for future development. In addition, bookkeeping also serves an important protective function. It is meant to protect various people. These can be employees, but also investors, suppliers, or even the public should be able to benefit from the advantages of bookkeeping.

Tools for the Company - But Not Only

Bookkeeping and accounting are important tools for a business. The data provide an important basis for planning. This allows the management to make informed decisions. A cash flow statement provides further information about the origin and use of financial resources and is especially important in large companies as a tool.

Accounting also plays an important role for individuals involved in the company, be they shareholders or employees. Outsiders are also intended to be protected by the obligation to keep books. Creditor protection and the protection of the general public also have important significance.

Finally, accounting also serves to fulfill public duties. It serves as a basis for assessing a company's taxation.