WHY BOOKKEEPING IMPORTANT TO EVERY BUSINESS
Helps provide an overview of your finances
Keeping tack of your revenues and expenses help gauge how well your company is doing. It helps you look into the workings of each aspect of the business. Are costs increasing? Did revenue increase? What business activity is the most expensive? What business activities are profitable?
Borrowing funds
As your business grows, you may find yourself needing money. When it’s time to borrow, you may need to ask people outside of your friends and family. Typically this means turning to lenders and investors. But before approaching them, you will need your financial records in order; starting with your books. Lenders and investors rely on your financial records to asses your company’s financial health by reviewing your Cash Flow, Balance Sheet and Income Statements to determine your credit risk.
Helps prepare for taxes
There are several benefits to maintaining accurate records: lessen the workload, capture tax deductions, and reduce costs. Keeping organized records can help lessen the time you spend looking for receipts and invoices when it’s time to do taxes. Secondly, maintaining accurate books can also help you maximize eligible tax deductions by the business. Lastly, you can reduce the time your CPA spends doing your taxes, thus the cost, as all the information is organized.
Improved Decision Making
When your making a decision, its best be as informed as you can. The best decisions are made when you have access to your company’s financials. These decisions can have long term effects on the company ’s profitability and achieving its objectives. Bookkeeping is the start of that process.
Audits
The 5 letter word most business owners dread. Unfortunately, there is no foolproof way to avoid it; however, taking key steps can help ease this worry. By keeping accurate records, it makes the process easier and faster.