Bookkeeping isn’t just something for people who love details. It’s an important part of running a company, no matter the size. While large companies can typically hire a bookkeeping specialist, small business owners usually don’t have the financial flexibility to do so. Business owners should have at least a basic understanding of bookkeeping.
Good Accounts Mean Good Business
Modern business is hyper-competitive and extremely fast-paced. Thanks to advances in technology and communication, business owners today have far more things to worry about than business owners of the past. Bookkeeping is essentially keeping tabs on your organization’s financial activity. Not only does bookkeeping keep your business healthy and afloat, but it can also save you from serious issues down the road.
Many businesses are beholden to government agency regulations, and keeping records of compliance can mean the difference between your company thriving or crashing and burning thanks to a government shutdown. Good bookkeeping leaves you less susceptible to tax issues, so you can rest assured knowing you have paid your taxes and have proof of doing so and are getting all the deductions you possibly can.
Choosing the Right Format
There are several ways to approach bookkeeping, and each business may find one method more viable than the others. Whichever method you think works best for your company, stick with it. Bookkeeping systems are one of the few aspects of your company you don’t want to have to overhaul a year after opening the doors. If you can’t hire a bookkeeping specialist or firm to manage your financial records, thoroughly research your options and choose what will work best for you.
Creating a Great System
Good bookkeeping should start as soon as you make the first steps toward opening your business. If you let your expense records and receipts pile up without some kind of record-keeping system, you will be creating a massive headache for yourself to deal with later. Decide early how you want to approach inventory, payroll, transactions, loan payments, and every other financial aspect of your business. When you start bookkeeping from the beginning, you make it a much more efficient process for your company.
Prepare for the Future
You should be able to trace any financial aspect of your business back at least one year. For some businesses in heavily regulated industries, you may need to keep records readily available for much longer. Whatever the case may be, establish a system that allows you to quickly access records from the past year and keep older records safely stored and indexed should you need them in the future.
Ultimately, the best way to approach bookkeeping is from the very beginning with a firm understanding of your business’s financial concerns. Find a system that works for you, stick with it, and don’t be afraid to reach out to a professional accountant for advice.