Implementing bookkeeping services for your small business may seem like an extra burden, but it is vital to your business’s success.
First, bookkeeping is the process of recording the daily transactions of your business. It is a way to keep track of your business’s financial information. Bookkeeping is essential to the growth of your business as it helps you track your profit and loss.
However, few business owners know the importance of recording their business’ activities. Consequently, their businesses fail as a result of poor financial records. Poor bookkeeping practices can lead to missed income or unaccountable losses. The importance of bookkeeping services in small businesses is numerous. Here are five of them.
- Helps you maintain organized financial records
Implementing proper bookkeeping services will help you maintain accurate and organized financial records that are easy to locate when appropriate parties request. Generally, The IRS, employees, customers, lenders, and investors are the five main parties that may request your business’ financial records.
Again, bookkeeping makes your finances more comprehensive and understandable so you can determine the performance of your business at a glance. An organized financial record is helpful when making a budget for your business, applying for loans, and attracting investors.
- Facilitates efficient decision-making
By staying on top of your books and keeping up-to-date financial records, you can quickly determine the financial state of your business. This information directly influences the business decisions you make. With accurate financial records, you can determine whether you are making enough profit or enough resources to expand your business, introduce a new product, acquire more assets or hire more employees. And on the other hand, apply for a loan.
- Bookkeeping makes tax filings easier
No doubt, tax filings at the end of every year can be a stressful season for small business owners. However, with an accurate and efficient bookkeeping system, this process becomes more straightforward and less stressful as your financial information is readily available for the tax season. Instead of scrambling around to get the information you need, bookkeeping ensures that this information is readily prepared beforehand.
Also, with an accurate bookkeeping system, you can easily calculate and predict your tax amount, thus preventing you from paying more than you should.
- Helps you budget accurately
Bookkeeping makes it so much easier to create business budgets accurately. You can quickly know your business’s income and expenses with organized book records. You can use this information to analyze your expenses and adjust your budget. You can quickly identify and cut back on irrelevant expenses.
For example, you can reduce the budget for newspaper advertising to improve other business areas. Also, you can see which products or services are generating the most revenue and put more resources into this area to increase your profit further.
Financial statements can help you determine your business’s performance and help you create a budget that will help you increase your revenue and plan for your future expenses.
- Organized books give you extra peace of mind.
Unorganized books can contribute to all the stress of running your business. As a business owner, the last thing you need on top of your day-to-day tasks is to stay up all night balancing your books to meet tax deadlines.
When your books are complete, you can rest knowing that your business’s financial information is readily available when needed. This ease of mind will keep you focused on other business areas.
If you are a small business owner, keeping regular financial records is vital to keeping your business afloat. As stated earlier, many small businesses fail due to a lack of proper book records. Implementing bookkeeping services in your business will give you a better idea of cash flow, allowing you to make better business decisions. It also gives you an overview of your business income and expenses, allowing you to anticipate future expenses. In a nutshell, bookkeeping is essential for small businesses.
Book in for a free consultation or give our team a call. See if TW Accounting is the right fit for you and your business.