Bookkeeping is one of the most important aspects of running a small business. If you’re not keeping track of your finances, you may not be able to make informed decisions about how to spend your money or where to invest in your company.
What’s more, if you don’t keep good records and report them accurately, the IRS could come after you for underreporting income or other issues related to taxes.
If you’re a small business owner, you’ve probably wondered whether bookkeeping is really necessary.
You’ve probably wondered why bookkeeping is so important to small businesses. Bookkeeping is the process of recording transactions and financial data, then summarizing and analyzing it. This makes it easier to measure how well your business is doing, prepare financial statements, and make decisions about what you should do next.
There are two main types of bookkeepers: independent contractors and in-house employees. Whether you choose an independent contractor, or an employee depends on several factors, including cost and expertise required for the job being done by the bookkeeper. If your company is small enough that hiring an employee just isn’t feasible right now—or if you prefer working with an outside expert because they’ll have access to more resources than someone who works inside your office—then using an independent contractor may be a good choice for you! At Findlay CPA, we take pride in helping small businesses grow through our services as we’ve helped over 500 clients with their accounting practices. Read more about our client success stories here.
It’s important to stay on top of your books to keep on top of your business.
Bookkeeping for small businesses, or businesses of any size in fact, allows them to stay on top of their books. You can’t manage what you don’t measure, and you can’t improve what you don’t measure. If you’re not keeping track of where money is going and coming from, it’s impossible for anyone—including yourself—to know if or how the business is thriving.
Keeping accurate records can help with tax filing, audits and more.
There are several reasons for small businesses to hire bookkeeping help, taxes are just one of them.
- You can use your records as a reference when filing taxes and doing audits.
- Keeping accurate records helps you manage your business more effectively. For example, if you want to know how much money was spent on advertising in the past year, you can look at your accounting system and find out exactly where all of the advertising funds went. This way, if there is an unexpected increase in sales next month and you need extra money for marketing purposes without having enough cash on hand (which could result in overdraft fees), then knowing what’s already been spent will allow you make educated decisions about which areas need more resources allocated towards them so that they can continue being effective at generating income for the company overall!
- Keeping accurate financial statements allows outsiders like investors or lenders to see that everything is being done according to plan—and if something isn’t working out quite right yet then at least they’ll know where things stand now compared to previous expectations.
Inaccurate financial reporting can mean the difference between success and failure.
It’s simple: accurate financial reporting can mean the difference between success and failure.
For example, if your business is losing money and you don’t know it, you might be tempted to continue operating in the red. If you knew how deep in the hole your company was, however, you’d probably be more inclined to make changes that could help turn things around.
This is especially true when it comes to income forecasting. Accurate recordkeeping lets you know exactly how much money has been coming in each month or quarter so that as soon as sales fall off, you’ll be able to make informed decisions about where expenses should be cut, or investments should be made in order not only to survive but also thrive during these tough times.
Bookkeeping helps you with budgeting for your business.
Small business bookkeeping enables you to determine whether or not your business is making a profit or operating at a loss (if this information isn’t readily available). Once again, knowing whether or not there is enough cash flow provides valuable insight into whether adjustments need to be made so that the company can continue on its current path toward success rather than toward failure!
Conclusion
If you’re a small business owner, the answer is a resounding yes. If you run a business without proper bookkeeping, it can lead to inaccurate financial reporting, which can mean that you miss out on tax breaks or even end up in trouble with the IRS. Over the course of the last 40+ years, we’ve realized that bookkeeping for small businesses means the difference between being able to plan out your business expenses and going with the flow – and you never want to go with the flow. Get in touch with us today to learn more about how we can help your business bookkeeping process or learn more about the services we provide for small and growing businesses.