If there is one thing too many small business owners and entrepreneurs learn the hard way-it is the importance of bookkeeping for their business. In order to help grow and protect the business, records must be kept (and it does not mean 'kept' in the bottom drawer of a desk or in boxes filling the office).
Bookkeeping is when a business owner keeps all documents from all business transactions, proving transparency and traceable records of accounting from beginning to end. Receipts, invoices, register tapes, bank statements, credit card statements, and check copies are the majority of documents a business owner deals with, but there are more. Basically, every piece of paperwork that is related to a financial transaction with a business should be kept, logged and organized.
While business may be booming and that stack of receipts and paperwork filling your desk doesn't seem to be a priority, you could be making a very costly mistake that can sink the business into a hole.
How do you know if you are turning profits or not?
You need numbers to scale your business. Good, hard numbers are tangible and can be worked within a multitude of ways to benefit your business and employees.
The advantages to good record keeping for your small business are too long to list, but here are the vital ones to know now:
- Immediate data at hand will give insight and information required to not only run day to day operations, but to grow the overall business.
- Helps business owners reduce tax obligations by maximizing every expense claimed.
- Makes tax-time a breeze, planning for tax payments easier, and enables quicker preparation for accounts at year-end.
- Instantly helps business owners if audited by the IRS.
- Record keeping helps to identify the weaknesses and strengths of a business, which can be reviewed every quarter and year.
- Good record keeping enables for business owners to make informed, useful improvements and changes in the business.
- Makes it easier to set-up shareholder dividend profit distributions, as well as for partnerships where gains and losses alike are shared.
- Employee, vendor and creditor payments can be planned out in order to meet financial commitments on time (automated is best and a time-saver).
- Applying for loans and grants is easier and a faster process with good business records and financials at your fingertips.
If you need help with record keeping for your small business, please get in touch with us today. Help is here!