The Importance of Proper BookkeepingBrian Jang ON August 23, 2021
In recent years, growing numbers of people are discovering that it is possible to start their own business. It may start simply, with the realization that there is a market for the craft items they have enjoyed making for friends and family. They soon find themselves producing on a larger scale and enjoying every moment of connecting with new customers and building their business.
What they may not love quite so much is the administration that comes with this new undertaking – specifically, the bookkeeping. There may be the temptation to find someone inexpensive to handle it all, or worse yet, to simply put it off, saving it “for later.”
Unfortunately, bookkeeping is an important part of running your business and it’s important to get it right, even in the earliest stages of your business. Here are some of the reasons why:
Creating A Roadmap
When your bookkeeping is a mess, creating a useful budget is all but impossible. To forecast correctly, you need accurate information that your bookkeeping provides. Having correct and accurate figures to work from allows you to plan for the future and measure, estimating expenses, and predicting your growth.
Organizing Your Records
Finding the receipts you need when they are stuffed haphazardly into assorted files, envelopes, and boxes can be an exercise in frustration and futility that can be easily avoided with proper bookkeeping. When your records are organized properly, you can find what you need when you need it, allowing you to supply the relevant information when it is requested of you.
If your bookkeeping is not up to date, you will not be able to perform an accurate analysis of your strengths and weaknesses, meaning you will not be employing your resources in the most efficient manner. With the right insight, you will be able to pinpoint where you need to direct your attention and your finances. This kind of information is what allows you to make critical decisions regarding the future of your business.
Managing Your Finances
Proper financial management is reliant on good bookkeeping. To be able to make informed decisions about your company, you need a clear understanding of all funds coming in and going out. When crucial decisions need to be made, you want to be able to do so from a position of understanding.
Bookkeeping lets you know how well your business is doing at any given time.
Controlling Your Cash Flow
Having control over your cash flow is one of the most important aspects of any business, particularly in the early days. It requires being aware of your Accounts Payable and Accounts Receivable with each of your vendors and clients. Taking actions such as reducing the amount of time your customers have to make payments while also making your own vendor payments a day or two before they are due will increase your average cash on hand throughout the month, but this is only possible with adequate bookkeeping.
No one likes paying taxes but paying more than you need to is even worse. Proper accounting records could result in tax savings by giving you the information you need to pay the right amount at the proper time.
Bookkeeping is probably not something that you started your business to experience, but it is nonetheless an integral part. As such, if you are unable or unwilling to give it the attention it requires, contact us today and we can handle it for you so that you can get back to doing what you love most: running your business.