To hire a professional bookkeeper may seem like an expense, but it is an investment that will pay dividends rapidly for a long-term basis.
Accurate Financial Records:
Small business owners need to understand the cash inflow and outflow. The bookkeeping will keep your accounts up to date and accurate and help to identify the more profitable clients and resolve discrepancies between small business owners and suppliers.
Compliance With Rules and Regulations:
Small businesses are obligated to keep their books of accounts in compliance with various IRS accounting standards and tax laws for having a clean report if they get audited. By maintaining IRS-compliant books of accounts, small business owners can answer questions about business expenses, income, and losses and save their small businesses from a lengthy audit process.
Better Business Planning:
Due to the miscalculation of financial data, many small business owners are afraid to avail themselves of new business opportunities. Bookkeeping will benefit the small business owner by gaining confidence in his financial data and accurate profits, which will help to predict the business's finances accurately and seize new investment opportunities.
Quick Financial Reporting:
The small business owner can provide the investor with the financial position of their business whenever they need, as the bookkeeping benefits them by having an updated financial statement. The small business owner will no longer have to wait for the accountant or the audit report to generate the financial statements/report for the investors.
Improvement in Cash Management:
Small business owners have to struggle daily with managing their cash. By adapting bookkeeping in a small business, the owner can keep track of daily cash inflow and outflow. Today the cloud-based bookkeeping software or app allows the small business owner to keep updated with the profit earned to date and the upcoming expenses, e.g., rent, with one click. Small business owners can easily visualize their upcoming business expenses and profits and make appropriate financial decisions accordingly.
Bookkeeping protects small business owners from fraud and embezzlement. For example, if a small business employee uses business funds for personal use. The owner can detect the fraud immediately as the business transactions are compiled daily and take serious action against the employee.
Many small business owners do not consider bookkeeping a critical task of their business operation. They are making a tremendous mistake, as they have to invest plenty of time in managing all business expenses and will rush to know their financial position if tax season or audit is near. Bookkeeping allows the small business owner to record business transactions daily, which avoids the mistakes that occur due to the hustle and bustle created by maintaining the books of accounts.
Avoid Late Fees and Penalties
A proper and accurate bookkeeping system in the small business helps the owner help to track the payables, save money through earning early payment discounts, and avoid paying interest due to late payments. It also protects the small business owner from penalties incurred due to payroll remittance late payments.
Access to Finance
Keeping the book of accounts in order will help the small business owner apply for a loan at any time. The lender looks at the owner's credit score, cash flow history, projected financial statements, and business plan. For financing the best business opportunity at the right time, a small business must have its financial records maintained systematically before applying for a loan.
Accurate Tax Planning
For most small business owner, the taxation process is hectic and time-consuming. Due to mismanagement of business finances, small business owners often miss out on all the tax deductions and tax credits, which results in inaccurate tax filings that lead to penalties and audits. A bookkeeping system provides a stress-free tax filing season and tax write-off benefits.
Small businesses have to deal with many business-related tasks, like hiring a new employee, advertising, and promoting their products and services, and these tasks require financial resources. If these expenses are managed daily as per tax regulations, it provides the small business owner peace of mind.
Getting all the business accounts in order may sound like a headache. But bookkeeping is a breeze for small businesses, not a headache. Once all the business financials are recorded properly, the bookkeeping process will become less time-consuming and a routine task. It will benefit small businesses, resulting in the growth and sustainability of their wealth.