Story sponsored by Balancing Books Bookkeeping.
As a business owner, you should understand the financial position of your company, including its net income or loss.
You need this information to help you and the stakeholders of your company make informed decisions about day-to-day operations as well as business strategies.
Bookkeeping services, like Balancing Books Bookkeeping, enable business owners or managers to run a business effectively and efficiently by supplying the essential information to them.
While it's true that bookkeeping helps businesses of any size, it's often a neglected process, which harms those businesses.
Many businesses fail because of financial mismanagement as a result of not having books or accounting records on hand.
Here are six reasons why bookkeeping is so important:
One of the most obvious benefits that the bookkeeping process brings is that it helps business owners budget.
When a bookkeeper takes care of your income and expenses, these numbers stay organised, which makes it more comfortable to review your financial resources and the money going out of your business account.
As you probably already know, you need a budget plan to make the financial roadmap of your business clear. With adequately organised books and accounting records, you can come up with a budget that'll help you plan for expenses in the future and identify resources that would help you cover those expenses.
One of the essential things you can focus on as a business owner is the cash flow management of your company.
Delayed invoices (not following up on customer payments) and miscommunicating with the suppliers will crash you down.
If you want to make these things systematic, you need a bookkeeping system in place for up-to-date invoicing, follow-ups and providing suppliers with on-time payment.
Accounts payables are a part of any business and it's something that you have to take care of for your business to survive.
Accounts payables are money that you owe to third-parties and failing to settle them can lead you to severe consequences.
Effective bookkeeping can tell you if your business doesn't have enough in the budget to pay these accounts on time, giving you the chance to look for other sources or take the financing option out as a temporary solution to the problem.
You should pay the accounts payables of your business without compromising your working capital and bookkeeping can help you do it effectively.
You have to prepare and file a tax return for your business each year. It's an obligation that most companies struggle with due to a lack of proper bookkeeping in place.
Sounds familiar? If it's also something that you've been struggling with since day one, then it's the perfect time to make the tax filing process more efficient by having a reliable bookkeeping function within your business.
Bookkeeping isn't only for your company. It can also help you with personal tax filing as a business owner. A large portion of your income comes from the operations of your business.
Thus, taking an accurate look at your income for a given period means understanding how much your business makes within that specific period.
Tax preparation becomes quicker and more comfortable with a bookkeeping system functioning in your company. All the necessary financial information will be ready and available on time.
So, instead of scrambling for invoices or receipts, you have all the financial information organised and stored in a single central system.
If you want to facilitate employee payments better a reliable bookkeeping system can help you out.
Bookkeeping takes care of record-keeping for employees, handles bank reconciliations and communicates with the payroll function.
It makes sure that your business doesn't end up underpaying employees by determining the exact amount of money needed to cover their salary and when the payroll should reach the appropriate parties.
Without effective bookkeeping within your company, you'll struggle to maintain an accurate payroll process, which will result in dissatisfaction among your team.
Proper organisation is crucial for any business to succeed. It helps a lot that you're able to find relevant business information anytime when the need for it arises.
The financial records of your company will also be of great help to several parties, including the ATO, your customers, employees, lenders and investors.
Provide your organised financial records to these parties when requested to maintain a good relationship with them. In the case of the ATO, it means avoiding fees and penalties.
The things discussed above should be enough to help you realise the importance of bookkeeping to your business.
Now that you know how essential it is to have an excellent bookkeeping process implemented in your company, the next step would be to find the best bookkeeping professional to help you. Hiring one saves you time, money, and headache.
Story sponsored by Balancing Books Bookkeeping.