Top Reasons Why Bookkeeping is Important for your Business
There is no other to go around it – bookkeeping lies in the very heart of any kind of business, irrespective of its size, type, field or industry. Sadly enough, bookkeeping is frequently the most overlooked task, and that is a practice that sooner or later will take its toll on the company’s function and prospects. The fact is that a significant percentage of companies are forced out of the market because of poor bookkeeping practices, including mismanagement, rough-and-ready accounting and all sorts of mistakes and overlooks.
So, since bookkeeping can literally “make or break” your business, take some time to understand why it is so important and what you can do to ensure proper bookkeeping practices or services.
Bookkeeping – What Exactly Does it Involve?
Well, bookkeeping is defined as the process of recording a business’ financial transactions and is actually the basis of another vital sector, the accounting process. Accounting, on the other hand, includes
- the classification,
- and the analysis of the all the recorded financial data.
As one can easily understand, none of these tasks can be properly performed without well organized and accurate bookkeeping.
Although one might think the above is already enough to convince businessmen about the importance of proper bookkeeping practices, let’s examine some more specific reasons that will shed even more light to the subject.
Improved Financial Analysis & Management
First things first: your business needs cash to stay afloat, and cash flow management is never easy. No matter how heavy your schedule might be, when invoices are delayed, customers don’t pay, you can’t pay your suppliers, your orders fall behind, your customers are disappointed and soon things will get ugly.
On the contrary, bookkeeping keeps things organized: up-to-date follow-ups, invoices, on – time payments – and your fate is in your own hands.
- No Problems with the IRA
Bookkeeping helps you keep track on information and tax related issues and annual taxation never gets complicated, for example, by realizing that you have just 1 week to file and running here and there trying to remember where have you put those bills, invoices and receipts, and striving to remember your expenses.
Tax returns will also become much easier when your Balance Sheets, Cash Flow and Profit & Loss records are in order, saving your tax advisor precious time and energy, which can be used instead for clever tax advice.
Proper bookkeeping will also facilitate the whole process of reporting to your investors on data and information concerning your firm’s financial condition and prospects. Bookkeeping programs can depict through charts, graphs, lists of segregated data etc, making it easier for you to make your point and for your investors to understand it and go along with your plans and proposals – which leads us to the next benefit of proper bookkeeping.
Just by using the information of your Balance Sheet and Profit & Loss, you can easily check if the firm does well or not, discover possible flaws in your plans and unearth issues that could ruin your prospects. Thus, business planning is made so much easier and, what’s more important, efficient.
Proper & Lawful Record Keeping
Last but in no way least, there is the issue of record keeping. Bookkeeping helps this sensitive and challenging aspect of your business remain well organized, from trifles to big invoices. Hence, the whole retrieving process becomes much easier when the time comes to submit to an audit.
To sum it Up
We are sure you are pretty convinced right now, at least about one thing: proper bookkeeping services is not a luxury, it is not a bywork to your business, for the simple reason that it plays a vital role to your firm’s financial existence, its competence to meet its obligations, its planning and prospects, its relationship with the IRA – almost everything. So, the best thing to do would be to hire a competent and experienced bookkeeper – accountant that will take care of your business and make sure the very foundation of your business is in excellent condition. Remember, that bookkeeping will not just shield you against bankruptcy, but it can be the driving force behind your firm’s thriving and development.