Today’s “there’s an app for that” attitude and general reliance on technology means some people believe bookkeeping is going out of style. However, bookkeeping is more than just keeping accurate records of your company’s finances. It’s a way to set long- and short-term goals, create room for entrepreneurial thinking, and save money. Without a solid, reliable bookkeeping system, several aspects of your business such as payroll will fall through the cracks, and your money will fall along with it. The benefits of bookkeeping are myriad and not to be overlooked.
Bookkeeping Helps with Taxes
Tax season is in full swing. As much as most of us hate doing taxes, they are a necessary part of keeping any business operational. Accurate bookkeeping is crucial to turning in correct taxes. In fact, the penalties, fines, and other repercussions that may be imposed if you don’t keep up could wipe out your business entirely.
Check your books regularly to ensure every part of your finances remains accurate. This includes how many employees you have, how much they are paid, what your expenses encompass each quarter or fiscal year, and so forth. If you use a digital bookkeeping system, make sure your receipts and tax information are kept in secure folders and your computer has a good backup system.
Bookkeeping Ensures Everyone Gets Paid
While payroll is one of the most important aspects of business, it’s one that’s often overlooked. Backlogs can build up fast, especially in small or home-based businesses. Before you know it, it’s been six weeks and some employees are missing paychecks or haven’t been paid at all. This seriously damages morale and can cost you employees and your good business reputation.
Keep meticulous track of how much you pay employees, for what tasks, and how often. Build occasions such as holidays or vacation time into your bookkeeping system so you can warn employees ahead of time if payroll will be late or will change during a pay period.
Bookkeeping Helps You Focus on Important Tasks
Many business owners don’t manage bookkeeping because they think it’s an arduous task. That may be true, but meticulous bookkeeping actually gives you more time to focus on the real reasons your business exists. In other words, careful bookkeeping lets you focus more on your passions. For example, if you own a tutoring business and know you have enough money saved to bring in more computers, you can focus on bringing in clients and showing them how technology can help improve their schoolwork.
Bookkeeping Helps You Avoid Accounting Mistakes
Even the most seasoned business owner can make accounting mistakes, especially if he or she doesn’t stay abreast of bookkeeping. For example, let’s say one day you forget to record one business expense or receipt, putting it off until “later.” This easily becomes a habit that’s difficult to break. It can also be easy to forget to record receivables, which means you may run short on cash when you don’t have to. Bookkeeping ensures you always know when a client owes you money and how much. It also helps you keep track of how expenses should change from quarter to quarter, or whether materials should be replenished.