Picture this: your business is running smoothly, clients are repurchasing, and word is spreading that your products are top-notch. You’re thinking nothing could ever go wrong when all of a sudden it does.
You skipped bookkeeping, thinking it was insignificant. Now you can’t paint a clear picture of how your finances are going, you don’t have accurate records, and you can’t track your cash flow.
The gist of it is that running a business is tough work. But to make ends meet, you need to be well aware of your business’s finances. This is where bookkeeping comes in.
What Is Bookkeeping?
Bookkeeping is one of the important ways to solve your cash flow problems, keep track of your finances, and check whether you’re making more money than you’re spending.
It is the practice of recording and keeping track of the financial transactions of your business. When running a business, there are financial decisions you go into and with proper bookkeeping, you can record these transactions on the books.
Without bookkeeping, companies won’t be aware of their financial position. Inaccurate bookkeeping, or the lack thereof, could lead to poor financial decisions because there is no financial information to rely on.
If you want your empire to grow, you need to know how your finances are and see whether they are viable. Through proper bookkeeping, you can make smarter financial decisions, wiser choices in investing, and proper business operations.
Here are some other reasons why you should implement bookkeeping in your business:
Reasons Why Bookkeeping Is Important
1. Helps with budgeting
For new businesses, what do you need most? How important is money to bringing your business plans to life?
Small businesses cannot afford to go bankrupt, especially when they’re still in the process of growing. With that, budgeting is a must.
And budgeting is something that can be done through simple bookkeeping. Keeping an organized and accurate record of your financial statements could help you in the long run.
How were sales last year? Did anything change in your supplier’s prices? How did all of these impact your sales and costs?
With bookkeeping, you can have a roadmap to success. You can keep track of your current financial situation for future success and growth. This is better than doing constant guesswork and creating poor financial decisions.
2. Keeps your records accurate
Regardless of what company you have or what industry you’re in, maintaining organized records is needed everywhere.
Bookkeeping is one way to keep your records accurate and organized. This saves you from last-minute stresses when dealing with financial difficulties, applying for loans, or trying out investments.
Having accurate and organized records also helps you see if you’re turning a profit. It gives you a clear picture of your business’s cash inflows and outflows, which therefore sets you up for success in the long run.
3. Useful in filing taxes
Filing taxes can be time-consuming, but this process is critical in running a business. There are multiple reasons why companies need to file their taxes, but the main idea is that it keeps you out of trouble with the government.
Bookkeeping helps with budgeting, which in turn, helps with making paying taxes easier. You can easily pay off your taxes without hurting a huge chunk of your budget.
This process also helps you present a detailed record to your accountant. There is no longer any need for the long and tiring process of rummaging through cabinets for documents, invoices, and receipts.
Overall, bookkeeping saves you time and from dealing with the stresses of running a business. With an accurate bookkeeping record, you shouldn’t fear being audited by the government because you have reliable proof to back you up.
4. Makes decision-making easier
How do you plan on growing your business? Are you ready to invest? Do you think you’re financially viable to apply for loans?
Simple bookkeeping is essential in making wise financial decisions be it applying for loans, grants, and investments among others. You’ll see through this process if your company is ready for short-term and long-term strategies to grow.
Moreover, the fundamental asset of a business is its employees. Their importance may be usually overlooked, but they are the ones you need to grow your business – they are the bridge between your company and the clients.
In hiring employees, you would also need to check your budget. How many employees can you afford to hire? How much is their salary? Can your business’s financial condition afford to add someone to the payroll?
5. Helps with growing your empire
When growing your business, who do you first look for? Investors. And this is because your business needs funding to succeed.
These investors cannot go in and invest blindly – they need solid, accurate proof that your business is worth investing in. Through this, they can determine whether your business is a success or a failure and whether it’s worth putting their money into it.
Bookkeeping is a simple process, and despite that, it is crucial in any business. Although you are not an expert in this field, bookkeeping is a great start for you.
Now that you know why bookkeeping is essential, put it into practice. Hire an expert that would help you analyze and interpret what this information could mean for your business at present and in the future.
Bookkeeping is only the beginning of a long and tedious process of accounting.
Need help with bookkeeping?
We are here to assist you.
We, at Savvi Accounting and Shared Services, specialize in accounting as well as bookkeeping so you can focus more on growing your business.
We can also help you with payroll, government contributions, tax filing, and business registration.
Contact us for a free service quotation today at +63917-174-7277 and firstname.lastname@example.org