Let’s face it, bookkeeping is important in any business small or large sized. Sad to say, this process is often neglected which has a direct adverse effect on the business. In fact, according to CPA Australia, some businesses fail due to financial mismanagement while other has weak or no accounting records or books on hand.
What is bookkeeping?
By definition, bookkeeping is the process of recording your or a company’s financial transactions and the first basic step of the accounting process. The accounting process involves classifying, reporting and analyzing of data and none of it can take place if there is no organized and accurate bookkeeping.
The importance of bookkeeping cannot be emphasized enough, but here are top reasons why this is vital to the health and life of your business.
1. Better financial analysis and management
Cash flow management is one of the most important things to focus. Regardless if you are busy or not, once invoices are delayed, no follow-ups on customer payments and falling out on supplier’s list of customers will eventually crash you down. Bookkeeping can systematize it up from up-to-date follow-ups, invoicing and on-time payment for suppliers.
2. Fulfillment of Tax Obligations
Bookkeeping keeps track on any information and documents in order to accomplish annual taxes. You don’t have to rush anymore to find all those bills or try remembering expenses when tax time comes. Tax returns are also made easier with an organized Balance Sheet, Cash Flow and Profit & Loss, your tax advisor will devote time in giving you sound tax advice instead of correcting entries in the financial statements.
3. Reporting to Investors is Easy
The process of reporting to your investors on crucial information about the financial status of the company is no longer a worry. From charts, graphs to lists of data presented to the investors are all acquired from the book of account.
4. Business Planning is Easy
What you need is only the Balance Sheet and Profit & Loss to check if the company is on the right track financially, from there you can start your business planning so much easy.
5. Proper Record Keeping as Required by Law
Bookkeeping keeps record keeping properly organized from small to big big/invoice. It makes retrieving process easy once audit time comes
To achieve all these, you can hire a bookkeeper or accountant to do it and keep your financial aspect intact and organized. Bookkeeping can spell the difference between success and bankruptcy and can also literally mean thousands of dollars for your business.