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As a bookkeeper, I can’t stress enough how important it is to have a good bookkeeping process in place for your business. Bookkeeping is the first step in compiling income and expenses and then turning the financial data into reports, statements, and many other essential tools you can use as a business owner.
Behind every good business owner is an experienced bookkeeper who will help you benefit from your record-keeping throughout the year.
Here are ten reasons why bookkeeping is critical to your business!
Budget
Bookkeeping will tell you how much income you are making and how much you are spending on expenses in your business.
Evaluating your income and costs will allow you to make conscience budgeting decisions. Budgeting decisions include cutting expenses, changing vendors, or hiring employees to grow your business.
Make life easier with my free Bookkeeping Simplified Guide!
Business Decisions
Bookkeeping helps you to make better business decisions. Business decisions range from finding ways to increase income, decrease expenses, and recognize opportunities to make money.
Once you have been in business for a year or longer, comparison reports help find seasonal trends and dips in sales.
Use and understand your Profit and Loss statement.
Detailed Bookkeeping
Once you have a bookkeeping process in place and your bookkeeping is kept up to date weekly, semi-monthly, or monthly you now have statements, reports, and current financial data to keep you aware of the ongoings within your business.
Detailed bookkeeping helps during income tax season. A competent bookkeeper will ask questions about expenses and categorize your qualified tax deductions.
Detect Errors
A reliable and accurate bookkeeper will find errors and make necessary corrections in your bookkeeping process. Inaccurate record keeping, categorizing, and lack of procedures are ways a good bookkeeper will help your business.
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Focus More Time on Your Business
Benefits of bookkeeping include having time to run your business. Processes in place for bookkeeping allow for more time to be the business owner, make managerial decisions, and generate income.
What tasks can you accomplish as a business owner if you had more time?
Create additional income for your business by opening a e-commerce store using Shopify. Or advertise your business on social media platforms using Canva templates!
Business Planning
When your bookkeeping transactions are up to date, it is easier to plan for future business growth, sales highs, sales lows, and other opportunities.
I suggest learning and understanding accounting statements like Profit and Loss and Cash Flow. These two statements will help you in the planning stages of your business.
Requirement by Law
Regardless of your industry, you will need to keep in compliance with federal and state laws. A bookkeeper will ensure payroll tax, sales taxes, and other payments are on time.
Look into legal templates created by a professional lawyer to protect your business and website.
Save Money
With the help of a bookkeeper, you can save money by tracking expenses, creating invoices, and keeping up with inventory.
It becomes easier to save money for seasonal losses, equipment, or investments.
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Collaboration
Let your bookkeeper collaborate with your accountant or tax advisor!
Your bookkeeper can keep adequate records by asking valid questions. And your tax advisor can complete your income taxes with no trouble. It’s a win-win situation!
Tax Preparation
Predicting yearly tax outcomes is easier with accurate financial statements and reports. One of the benefits of a bookkeeper who works with your accountant or tax advisor is the ability to break down deductible expenses for income tax season.
Visit my blog post: Important End of Year Checklist for Small Business on more end-of-year tasks.
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Keeping thorough records of your income and spending is one of the greatest methods to remain on top of your financial condition. Yes, we can check our balance at any time thanks to internet and mobile banking, but this is not enough. Even while you are aware of your current financial situation, it is not entirely clear when and from where your money is coming and departing.
Yes, keeping thorough records allows for an accurate income statement. An accurate income statement helps with the income tax return, budgeting, growth, and much more.
I like that you pointed out how bookkeeping would tell you how much income you are receiving and how much you are spending in expenses. I was skimming through a business book earlier and I saw a section that talked about bookkeeping. It seems pretty useful for businesses, and thankfully it seems there are companies nowadays that offer business bookkeeping solutions to other companies.
I recently opened a clothing retail store, and I’m currently having problems tracking our finances since accounting isn’t particularly my strong suit. I’m glad that you informed us about hiring bookkeeping services and how they can help keep our statements and financial data up to date, weekly, semi-monthly, or monthly to help with our business decisions. I’ll be sure to consider this once I find bookkeeping services I might just think of hiring soon.
Congratulations on opening up a clothing store! Yes, bookkeeping services can definitely help a business by understanding their finances. Feel free to schedule a discovery call with me if need some assistance with your bookkeeping. Here is my direct link: https://navigatewithprice.as.me/discovery.