While bookkeeping may not be your favorite thing when it comes to business matters, it is crucial to maintain. Here are nine reasons why bookkeeping is important to any business.
1. Tax Time
Annual taxes are a real pain to do or even have done. You must have all of your records that includes profit and loss, a balance sheet that is organised, and your cash flow in order to make things easier when it comes time to file. You do not want to have to search for receipts or information at the last minute but instead, be able to easily access what you need at a moment’s notice.
2. Analysis and Management
Proper bookkeeping allows you to analyze and manage your cash flow which means you pay invoices on time to vendors, know where your outgoing money is being spent, and can better keep up with the money coming in and going out.
3. Be More Informed
It is important for any business to have all of the information possible in their business dealings. Whether it’s knowledge of where your investment is needed most or where you seem to have the most expenses – without knowing what is going on, you cannot make good business decisions and this is easily rectified by having proper bookkeeping practices and allowing your virtual CFO to do the analysis on reports.
4. Keep Investors in the know
Another benefit of bookkeeping is the ability to keep your investors informed of what is going on. This leads to better rapport and the opportunity to receive more funding when showing where the expenses are needed. Proper bookkeeping means that you are able to show your investors graphs, charts, and any other information they require – and all at a moment’s notice.
5. The Law Requires It
No one wants to think about an audit but there is more to bookkeeping than simply trying to avoid one. The law actually requires you to keep proper records. This is to keep everyone honest. In fact, according to the Australian Government:
“Under tax law, you must keep records to record and explain your business transactions. You’re required to keep records relating to income tax, Goods and Services Tax (GST), payments to employees and business payments.”
6. Easier Access
No matter what reason you need to search your records, good bookkeeping practices ensures that you access them easier. If you need a receipt or payout, you are able to find it faster.
7. Saves Time
On the same note as easier access, proper bookkeeping saves you time. When researching a date a payout was made or when a repairman fixed something on the property, if you have your bookkeeping kept up to date, you do not have to search long to find what you are looking for.
8. Stay Organised
While staying organised makes good business sense, it also helps you react, think, and work better. Surely you have seen a movie where a business owner’s desk was a mess, with paperwork everywhere and nothing to be found. They most likely became frustrated and that is really what happens. Organised bookkeeping keeps your blood pressure lower and your mind calmer.
9. Plan Ahead
Proper bookkeeping that is organised allows your business to plan ahead easier. By accessing everything you need easily, you are better able to make plans for your company’s investment future.
If you are having trouble keeping your bookkeeping up to date and organised, proCFO helps do it for you. We keep your business financials on track and up-to-date, so you can focus on your business. If you want to learn more about how we help, simply contact us for more information.
About David Officen
David is the Founder and Managing Director of proCFO. David combines an accounting and consulting background with commercial experience both as a manager for large commercial businesses and as the owner of private and family businesses.