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Importance of Bookkeeping to Your Overall Business

Importance of Bookkeeping to Your Overall Business

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Did you know that your business’s books are a reflection of how well you’re doing? It is one of the most essential tasks, however, most business owners get caught up with other priorities and overlook their business finances. 

Accounting and bookkeeping services are tasks that are often complicated and technical yet still important for any type of business. At the end of the day, finance and money management makes your business thrive. 

Why Bookkeeping is Important for Business? 

Here are some reasons why you should keep bookkeeping around your business. 

  1. Proper and Detailed Recording of Finances

If you have a dedicated bookkeeper onboard, your books will always be updated. Having a complete and accurate financial statement will assist you in supervising your business. It will also help you in your future business decisions. 

Also, if you have detailed financial records it will be easier to plan and predict the future, including tax – check your cash flow management. Moreover, you can solve issues quickly or you can grab any opportunities you currently have. 

  1. Compliant with the Law

The practice of bookkeeping will also give you an overview of your business is still compliant with the law. If your bookkeeper keeps on updating your records, you will not have to worry about the latest legal regulations or any recent legal changes. 

  1. Instant Reporting

You can always access your updated balance sheet to inquire about the current state of the accounts. However, you have to let an accountant or the auditor check these reports for the conclusion of your financial statements. That’s why accounting and bookkeeping go hand-in-hand. 

But having your initial data can provide you additional confidence (or alarm) as the owner regarding your overall company health.

  1. Better Relations with Banks and Investors

Another advantage of keeping your books accurate and updated is for potential investors. Business investors and shareholders will initially look for your books to analyze if your business is worth their money.

If your books look good, you can land investors. Additionally, banks will be more willing to provide you with loans once they can see how you handle your finances and keep your business thriving. 

  1. Faster Financial Analysis

If you own a small business or a start-up and have a limited budget, you can opt to choose bookkeeping. Bookkeeping services tend to be less expensive than accounting. 

Most of the time people tend to get confused with these two practices but bookkeepers and accountants have different responsibilities. However, there are tasks a bookkeeper can do that can be enough for a small business.

Bookkeepers can give you detailed records with an initial analysis that can help you in your decision making. 

Using the initial information and analysis, you can immediately adapt and change any strategies you might have planned.

  1. Easier Audits

Bookkeepers help your business to have quicker yet still accurate audits.  They will keep your accounts organized and updated. 

You just need to seek an auditor from time to time to access the detailed balance sheets and compare them with the statements to know exactly what was done. 

Also, bookkeepers are trained to produce their report quickly and any mistakes that will float to the surface will be at your immediate knowledge.

Online Officer - Importance of Bookkeeping to Your Overall Business

 

How to Improve Business Bookkeeping?

You already learned what the importance of bookkeeping is to your business. If you currently have a bookkeeper on board, here are a few ways on how you can improve this practice for the betterment of your business. 

  1. Separate Business and Personal Finances

If you think that you can save time by joining your personal expenses and your small business income in one bookkeeping effort, think again because it will just cause you a tremendous headache for your business in the future. 

Open a separate business account as soon as you decide to go through with a startup business. Aside from this, it is advisable to get a separate credit card for your business so that whatever happens to your finances, your business account won’t be affected.

This is the best practice because you will never be out of finances in case your business fail. 

  1. Utilize Automation

Encoding data in the spreadsheets and reconciling numbers are traditional ways of bookkeeping. It is the right time to embrace automation because as your business grows, the number of records you need to look after also increases.

Use cloud-based accounting or bookkeeping software and do your banking online for streamlining all the processes involved in your business. The most advantageous part of this is that you can sync it with your business bank account for accurate and updated records.

  1. Consult a Professional

Seek the help of your accountant to figure out how you can utilize off-the-shelf accounting software. Since you also have the option to customize it, ask your accountant if you could benefit from it. 

Your accountant should be able to offer advice and help you to set up the software. Let your accountant train you on using it. In this way, the records will be more transparent because you will understand the basics of accounting and bookkeeping. 

  1. Practice Regular Financial Checkups

If you will put-off bookkeeping too long, you will end up with bounced checks, delayed invoices, or figures with discrepancies. It is recommended to go over your books weekly to ensure everything is right on track.

This will also help you to accurately track all your expenses so you will not be shocked by the time you read and check your books. Failure to update your book might also cause problems with your financial management and affect your business. 

  1. Perform Quarterly Review

Concerning financial checkups are quarterly reviews. It is essential to take an in-depth look at your overall records. It includes your accounting and bookkeeping records.

Check your key performance ratings and whether the trend of your sales is increasing or decreasing. A subject to review your year-over-year revenues and seek the help and opinion of your accountant.

  1. Keep Track of Your Business Expenses

There have been so many changes in the tax code and it is wise to ask your accountant what kind of expense you can deduct from your tax — from claiming receivables, maintaining detailed records, save time by scanning and digitizing receipts. You can also simplify expense tracking by always using a business credit card for business purchases.

  1. Use a Time-Tracking Software for Your Employees

Cloud-based time tracking software allows employees to clock in and out on their smartphones, tablets, or computers. But it doesn’t just save them hassles—it also makes your life easier by automatically tracking overtime, PTO, etc.

You can find time tracking software designed for just about any industry. Choose one that works with your bookkeeping software, and payroll will be a snap, too. 

This is also a signifier that your business is adapting to developments in the business world. 

Final Thoughts

Similar to other tasks to keep the business running, accounting, and bookkeeping is essential. However, in these changing times hiring a new bookkeeper for your business is hard. There are certain limitations.

Alternatively, you have the option to outsource your bookkeeping services. There are outsourcing agencies out there that specialize in accounting and bookkeeping

Outsourcing has been a trend because of its cost-effectivity and it saves a lot of time for the business owner without compromising the quality of service.

Interesting? Check out Online Officer and get a free quote for your business outsourcing needs. 

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