Bookkeeping can seem like a long and boring process, but it has many benefits for you and your business. Access to financial reports and compliance with laws and regulations are just a few of the benefits your business can achieve when regular bookkeeping procedures are in place.
Access to Financial Reports
The first benefit that bookkeeping can provide your business is access to financial reports. Financial reports including the income statement and balance sheet need to have the bookkeeping done first to produce accurate outputs. Accurate financial reports can give you the ability to make more informed business decisions and effectively analyze your business health. Other financial reports including accounts payable and accounts receivable aging schedules also require the bookkeeping to be current to create accurate reports.
Easier to Plan
Accurate financial reports make it easier to plan for business growth and generate tax projections. If your financial statements through June are forecasting that your business is growing at 5% a month, you might need to make adjustments, such as hiring another employee or increasing your supply order. Without accurate financial statements, you might have been stuck short-staffed or out of supplies, making bookkeeping an essential component of a successful business.
Compliance with Laws
Bookkeeping can also help you create an accurate tax projection before year-end hits. A tax projection takes your current income and projects it through the end of the year so you can get a basic idea of how much money you will get as a refund or owe. For certain businesses and individuals, estimated tax payments are required. Without projecting your income, you might have missed this requirement and be stuck with stiff fines and penalties imposed by government authorities. Regular bookkeeping can keep you up to date on your income levels to ensure you comply with all regulatory bodies.
Another benefit of regular bookkeeping that you might not have thought of is that it can lead to a deterrence of errors and fraud. It is much easier to fix an error that occurred last month as opposed to 6 months ago. Regular bookkeeping, such as bank reconciliations, can catch these errors timely. Additionally, fraud is often deterred when bookkeeping is done regularly. If employees see that the bookkeeping is only done once or twice a year, that might allow them to commit fraud and conceal it for a long period.
One of the top benefits that bookkeeping can lead to is effective cashflow management. Cashflow management is when you make informed business decisions that benefit your company and cash balance. When the bookkeeping is up to date, you might notice that you are low on cash. You can then take preventative measures, such as waiting until the last day to pay invoices or drawing on a line of credit, to maintain a healthy cash balance. If the bookkeeping was never done, you might not have noticed a low cash balance, which could lead to your business running out of cash and ultimately business failure.
The benefits of bookkeeping are clear, but do you have the time to complete and manage all your bookkeeping tasks? If you do, that’s great! However, if this seems like a task you don’t want to take on right now, Accountants Now would be more than happy to assist you. Accountants Now has all the tools necessary to complete your bookkeeping and provide you with a value-added service. Get started with a 1-On-1 consultation today to learn more about the benefits the experts at Accountants Now can give your business.