Running a successful business is no walk in the park. For an entrepreneur or other small business owner, you have to wear what seems like a million different hats to keep things moving forward. While it’s true that being knowledgeable and involved in your business is an asset, being a renaissance person shouldn’t necessarily apply to every aspect of your work. In fact, there are some areas of a business that thrive when they are handed over to a dedicated person or team. One of the best examples of this is bookkeeping. No matter where you are in your business life cycle, bookkeeping is something that must be attended to properly, lest you compromise the financial and overall health of your business. Still unconvinced? Here are 6 reasons why bookkeeping is a must for businesses to succeed.
1. Know Your Basics
In every business meeting, in all of your daily activities, in every part of your business’s operation, you will need to have easy access to and understanding of your financial information. You will need to keep track of bank accounts and ledgers, credit and debit transactions, payroll, and invoices, just to name a few things. These are all the roles and responsibilities that a bookkeeper takes on to keep a business running and to maintain organization and financial clarity. Though some will underestimate the importance of these roles, the truth of the matter is that bookkeeping is the bread and butter of any business. It’s what will help identify your financial position and inform your future decisions.
2. Informed Decisions
Making the right call in business means making choices informed by accurate and up-to-date financial intelligence. Bookkeeping will provide you with the tools you need to make strategic decisions, set goals, and understand your revenue sources better. If you are planning on creating or updating a business plan or making any purchases or changes to your business, a bookkeeper is crucial. To make the decisions required to achieve success in the business world, you need to have a clear view of what your past, present, and projected financial situation will be like.
3. Simplify Tax Season
Everyone is familiar with it, though no one likes it, tax time is an inevitable part of a fiscal year. The good news is, it doesn’t have to be as tough as you think. By outsourcing your bookkeeping you can avoid having to reallocate unnecessary time or resources to put together documentation. In fact, you won’t have to do much at all… it will already be done! By utilizing bookkeeping services like Digit, your business will already be compiling and recording your financial information on a daily basis. Plus, you’ll have things like invoices at the ready and may be able to secure additional tax deductions more easily.
4. Manage Cash Flow
One of the most overlooked yet important aspects of financial health is having a steady incoming flow of cash. This means having more money coming in than coming out, and it is something that is monitored and evaluated in real-time rather than at year’s end. Bookkeepers can help keep a close eye on incoming and outgoing funds, and help to mitigate any financial missteps. Analyzing debtors, invoicing quickly and accurately, and keeping a dedicated cash flow spreadsheet are all typical ways in which a bookkeeper would manage your accounts while also ensuring your cash flow is where it should be. If there is an impending issue, a bookkeeper will spot it so it can be remedied in advance.
5. Avoid Audits
With tax season behind them, people often think they have a year until they need to worry again. Unfortunately, this isn’t exactly how it works. Each year a higher number of businesses get audited, and the results can be disastrous if not prepared. Investing in professional bookkeeping ensures your files are orderly and comply with the regulations of any governmental body in your region. By cleaning up your books, you minimize audit red flags and can save your business some serious inconvenience and growth-hindering penalties in the long run.
6. Scale Your Business
A good rule of thumb for building a successful business is: if you have the means and the business model, scale it! Forward momentum is only sustainable as long as your business is expanding at the rate of its success. Scaling your venture is an important goal to keep in mind for the future of your business, and is dependent largely on financial viability. A bookkeeper can make suggestions, and help to plan the financial trends for expansion.
If you’re already in business, chances are you’ve devoted a great deal of time and effort into making it a reality. That kind of investment should be accompanied with the success you deserve-provided you have all the components in place. Bookkeeping is integral to the health and success of your business, so it’s important that you make it a priority. Without well organized and maintained financials you and your business will suffer, so make sure you’re giving it the attention and resources it deserves!