One of the most crucial aspects of every business is bookkeeping, and it is more crème for small businesses. This is because small businesses can fall rapidly because of poor bookkeeping. On the other hand, if you choose to do the right thing, your business is a step closer to being successful.
Booking involves two major tasks which are to Organize and store financial documents such as income tax records, journals, ledgers, financial statement etc. Bookkeeping helps small businesses to keep record of all transactions and events which include but are not limited to earnings, losses, inventory, payment, receipts and purchases.
The importance of bookkeeping for small businesses cannot be overemphasized because it does not only allow the business owner have understanding of the progress the business is making, it also keeps the business owner abreast of areas within the business where profits are made and where costs might be reduced.
The summary of the importance of bookkeeping for small business is that it gives you the current status of your business and helps you analyze your business financially to avoid future problems.
BOOKKEEPING HELPS SMALL BUSINESS DEVELOP PERFORMANCE CHART
As a small business owner, it is important you know the right time to employ new staffs and with proper bookkeeping, you will understand the best time to do it.
This is because bookkeeping will help you compare the current status of your business to the previous status. From the charts created while comparing, you can analyze the growth of your business.
PAYING TAX IS MUCH EASIER
One of the benefits of bookkeeping that is directly attached to small business is paying your annual taxes. You can only have an organized balance sheet if you have a bookkeeper, and the balance sheet will show everything about your business cash flow.
This means you don’t have to stress yourself searching for bills; you also spare your tax adviser some time and effort as he moves straight to offering tax related advice.
BOOKKEEPING MAKES CLAIMING BUSINESS EXPENSES EASIER
With better bookkeeping accounting, small businesses can track and organize business expenses since they are documented regularly.
All expense incurred by the business should always be paid from the business account and should be documented to help for tax and accounting purpose.
THE BUSINESS HAS A BETTER CASH FLOW
As explained earlier, bookkeeping records business events and transactions and with this you can plan ahead.
The popular English adage says and I quote “if you fail to plan, you plan to fail”. Planning ahead will help you meet deadlines and pay in time, it helps your business grow, and makes thing a lot easier.
REPORTING TO INVESTORS IS EASIER
Forget about going through the hassle of sorting documents when you have a bookkeeper. This is because you now have all the lists, charts and information required and all you need to do is present them to your investor.
Can we say bookkeeping is synonymous to organization because it allows you keep everything well-organized?
Bookkeeping does not only benefit you when you want to report to your investor. It also makes things easier in the case of an audit.
INFORMATION ABOUT THE BUSINESS IS ALWAYS AT YOUR FINGER TIP
With bookkeeping, information about your business is intact and you can always access them when needed.
CALL TO ACTION
People start small business and think bookkeeping is a burden and costly. Even if bookkeeping seems difficult in the beginning, it is efficient and effective at the long run.
One of the best ways to transform your small scale business into a large scale business is through bookkeeping.
THE WAY FORWARD
You have different option to choose from when it comes to bookkeeping. You might decide to do it yourself to save money, you may decide to hire a part time in-house bookkeeper, you may decide to work with an accountant or CPA outside your business and you may decide to outsource bookkeepers.
Doing it yourself will consume your time and remember it may not be effective if you have little or no knowledge about accounting or bookkeeping. Hiring a part time bookkeeper still takes your time because you need to supervise and add more cost to your profit and loss. But the best and advisable solution is to outsource outside bookkeepers with experience to help you.