Bookkeeping includes keeping track of records of financial transactions for client businesses. Although it varies from accounting as it does not involve the preparation of financial statements. Bookkeeping is an outsourced service and is particularly popular among very small businesses such as sole proprietors and small partnerships. In many cases the operators of these businesses are specialists in their business’ area of expertise, rather than in the administrative side of running a business. They outsource the bookkeeping duties in order to focus on core business activities and avoid the need to dedicate in-house resources to the role.
The demand for Bookkeeping services is derived
from the government, businesses and individuals requiring a variety of services
including compliance with statutory, tax and internal information requirements.
This includes financial information regarding their own affairs, such as
corporate structure, taxation planning, cash-flow projections, budgeting,
business plans, general accounting services, and bookkeeping.
Changes to
legislation can boost demand for compliance related services. In general,
changes to reporting requirements of small businesses tend to result in more
outsourcing of accounting and bookkeeping functions, which benefits the
industry. The move to International Accounting Standards and International
Financial Reporting Standards has also seen accounting fees rise for large
clients that are required to comply, due to the increased time taken in
reporting and auditing particularly in the transition period.
The
different services provided by accountancy firms have varying relationships
with the overall business cycle. Demand for the traditional general accounting,
tax and auditing services is less sensitive to changes in the business cycle.
Demand for insolvency and receivership services tends to be more highly
sensitive, growing as the economy moves into recession and declining during
periods of stronger economic activity. Demand for many advisory services such
as advice on acquisitions and expansion is also quite sensitive to the economic
cycle, moving pro-cyclically.
