Nothing says “organized”, better than keeping good records of all your business transactions. Having an organised system for handling the financial aspects of your business, will enable you to keep track of your finances and will give you an idea of how well your business is coping.
If you don’t take proper account of your finance, the money you earn will slip between your fingers, preventing you from saving, spend on important things, or investing wisely.
Most business owners often hire a professional accountant to take care of their financial records, but it is also smart for you to be involved, and aware, of how the records are being taken. It is obvious that no one is likely to take better care of your property than you are. It is also relatively expensive to retain an accountant, especially for small business owners so if you can do this on your own, you might be better for it.
Here are some reasons why bookkeeping is important for your small business:
#1. Helps you monitor business performance
Bookkeeping paints a clear picture of whether your business is thriving or taking a turn for the worse. With proper bookkeeping, you are more likely to avoid bankruptcy and evade a visit from the IRS.
#2. Supplys you with adequate information
Are you seeking to expand your business? Or hire a sales rep? Or acquire another business? If you are, you can only achieve this with money and your financial records will tell you if you can embark on such a journey without putting your business in jeopardy.
#3. Will influence your budgets
With a well-balanced financial record, it is much easier for you to budget for future business plans. A budget will help keep your business on track by forecasting your cash needs and helping you control expenditures.
#4. Helps in resource allocation
If you are in a partnership, allocating profits is made easier when you have properly kept records. It also shows transparency and prevents unnecessary conflicts.
#5. Will help you get loans
While applying for a loan from the bank, it is essential to present your business records to the bank in order for them to assess the level of risk you pose. They may want to see some of your bookkeeping procedures and documents to verify whether you run your business in a sound, professional manner.
Building a successful business requires operating in an efficient and organised manner, and this will involve paying close attention to your financial activities and keeping proper records.