Why You Need Bookkeeping

Every business—big or small—needs well-maintained financial records. Without them, a business’s financial position is unclear, filing taxes becomes more complicated and expensive, access to capital is reduced, and growth opportunities are limited.

Do you know how much revenue your business generates each month? If you look at a bank statement from six months ago, can you tell if a deposit was business income or a loan from a friend? Was that cash withdrawal for business expenses or personal use? Was the credit card payment for your business or personal card?

Answering these questions is crucial. They provide insight into your company’s profitability, value, liabilities, and equity. More importantly, understanding this information allows business owners to plan for the future and prepare for unforeseen events. A business owner who cannot answer these questions risks operating blindly, which can lead to failure without a clear understanding of why.

Having clear financial records offers additional benefits:

• Access to Financing: Lenders and grant providers require accurate financial statements.

• Improved Cash Flow: Properly tracking invoices ensures faster payment.

• Inventory Management: Knowing how quickly inventory turns over helps merchants restock efficiently.

Another critical consideration is taxes. Inaccurate or incomplete records can result in underpayment or overpayment of taxes. Depending on the company’s size and structure, it may also need to provide accurate balance sheets to the IRS.

Preparing your books properly takes time, especially when filing taxes. Neglecting this throughout the year often results in higher costs for last-minute bookkeeping services as tax deadlines approach.

If you own a business, staying on top of your financial position is essential. Keep your books up to date by hiring a skilled bookkeeper. Ensure open communication so that financial information is recorded quickly and accurately in your accounting software.

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