As a proprietor of a growing business, you must be able to keep track of your company’s financial position at all times. Knowing the net profit and loss statements, payables, receivables and other financial data is critical to running your business successfully.
Without this information, you cannot make informed decisions regarding the day-to-day operations of your business, nor formulate the right strategies to help your business grow.
Here are the top 6 reasons why you need to focus on bookkeeping:
Build a Business Budget and Stick to It
A budget is a financial roadmap for your business. Without a budget, you are likely to make several crucial mistakes like — overspending/under spending on inventory, missed payments, delayed payments, missing out on critical expenses including employee salary and more. You need a budget to help you plan your current and future expenses while reviewing the financial resources in hand.
You can quickly build a business budget, when your books are in order. When your financials are organized, it makes it simpler to plan a budget, which in turn, will help you review your resources and predict expenses.
2. Work out the Best Ways to Reduce Your Tax Burden
Tax returns are one of the biggest challenges for millions of business owners and entrepreneurs all across the country. Missing or incomplete paperwork makes business owners end up paying huge taxes that could have been avoided.
With organized bookkeeping, you can avail financial information about your business all prepared for tax returns. Instead, of rushing around for receipts and invoices at the last minute, you can figure out the best ways to reduce your tax burden.
3. Stay on Top of Payables and Receivables
Staying on top of payables (the money you owe to others) and receivables (the money that others owe to your business) is extremely important to avoid cash flow problems. By making bookkeeping an essential part of your day-to-day operations, you can ensure that your working capital doesn’t dry up.
4. Avail Business Funding Easily
All business owners avail external funding at some point or another to grow and expand their business. To avail business loans, you have to provide certain details about your business like — profit and loss statements for the last few years, trial balance sheet and more.
By organizing your bookkeeping, you can furnish all the necessary documentation required by your lender without any problem. Digital lending platforms like Indifi prefers businesses that are organized and your meticulous bookkeeping may even help you avail loans at reduced rates.
5. Make Informed Business Decisions and Plan for Expansion
In order, to take the best decisions regarding your business, you need to have all the pertinent information available at hand. Bookkeeping is what provides you with this information. Whether it’s opening a second location, expanding your market, purchasing new machinery, hiring additional staff or any other business decision — bookkeeping helps you make smart decisions, by helping you analyze the financials of your company.
6. Enjoy Peace of Mind
A disorganized business is sure to give you sleepless nights. When your books are up-to-date, you can breathe a sigh of relief, knowing that your company’s financial information is at your fingertips at all times. Be it the income tax department or lenders; you can furnish the required information immediately. This will put your mind at ease, helping you focus on other core business practices.
Running a Business without Proper Bookkeeping is like heading into a forest without lights.
Bookkeeping provides you with both the macro and micro view of your business. By properly maintaining your financial records, you can check the pulse of your business at all times. Apart from supplying you with all the key information about your business, proper bookkeeping helps you run your business effectively and efficiently.
Make sure to hire a qualified accountant to help you with your bookkeeping.