Bookkeeping sometimes takes a backseat when running a business. Business owners know the importance of accounting but often tend to allow the process of bookkeeping to fall by the wayside. You may be surprised to know that bookkeeping, no matter how insignificant it may seem, is actually something that should take precedence if you are looking to run a successful business. In today’s article, we look at exactly why this is so and how quality bookkeeping can be more impactful than you may think. Read on to find out more!
Bookkeeping Helps With Budgeting
Budgeting is something that is incredibly important when running a business. For this reason alone, bookkeeping is an essential process as it allows business owners to examine data relating to business finances and financial resources. Since bookkeeping is the process of keeping your company’s financial transactions in an organised manner, it is the first gateway to planning a proper budget for your business.
Financial Analysis and Management
If you own a business, we are sure that you have a great deal of interest in how your company is performing financially. Of course, without accurate data or records, it is impossible for business owners to analyse financial data. Being able to generate a balance sheet and income statement can truly go a long way when it comes to monitoring your business and ensuring that it is on track. Keeping an eye on cash flow is also equally important when running a business. This is where bookkeeping comes into play. A bookkeeper’s job is to record all transactions that occur in the business, ensuring that business owners have accurate data to analyse or pass on to their accounting team. Without this data, businesses may end up landing themselves in a poor financial situation that could in some cases even end in bankruptcy.
3. Prepare Your Taxes On Time
Every business has to file a tax return on an annual basis. It is not uncommon for business owners to start scrambling or running around looking for paperwork and information a week or two prior to tax due dates. If this sounds familiar, chances are your business would highly benefit from the help of a bookkeeper. Bookkeeping is a process that can ensure that your financial information is not just ready but also organised and ready to be sent off to the ATO. Instead of panicking and scrambling around, quality bookkeeping can ensure that all your tax and financial information is organised in a central system.
4. Lessen The Pain of Potential Audits
If you own a business, you also run the risk of being audited. Whilst this is something that certainly no one looks forward to, it is always wise that your business is prepared for the possibility of it happening. Having your bookkeeping organised is one of the best ways to prepare yourself for this as it ensures that all of your business’ financial information is organised in one location and easily accessible if needed. This can be very helpful during an audit as it can help you avoid any potential penalties or late fees.
5. Attract New Investors
If you are actively looking for people to invest in your business, bookkeeping should be at the top of your priority list. Investors want to know that their investment in your business is going to prove to be valuable in the future. One of the ways they do this is by quantifying the value of your investment. This is a process that involves them analysing your cash flow statement, income statement and various other financial statements that present the value of your business. Quality bookkeeping will ensure that potential investors have access to up to date financial records at all times, thus increasing the chances of them having confidence in your business and investing in it.
Quality bookkeeping is an impactful process that allows your business to organise and keep track of its financial health at all times. We hope that this article has given you insight into just a few benefits that quality bookkeeping can offer your business.