5 Reasons Bookkeeping is Essential for Small Business Success
Calculating your income and expenses isn't something you should do solely during tax season. I know it's not everyone's cup of tea, but here are some reasons why bookkeeping is so important.
1. Tax Obligations
No one likes a surprise when they file a return. When you have an up to date profit & loss, balance sheet and cash flow statements, fulfilling your business tax requirements is much easier on you and your return preparer. Saving you time and money!
By maintaining accurate books year-round, you can avoid the "oh crap, it's tax time" scramble.
Newly self-employed? Each quarter, self-employed business owners must estimate their federal and state income tax payment and send a check to the IRS and their state. Up to date tracking of your expenses will help offset how much estimated tax you pay.
2. Financial Management
When you keep your books in good order, you can easily track what bills are due for payment, what clients you should collect from and how much money is available. Knowing your financial health right now, in this moment, while you're reading this very article is important.
“Never take your eyes off the cash flow because it's the life blood of business” - Richard Branson
3. Audit Protection
In the unfortunate event of an IRS audit, having accurate records (and receipts!) will help ease the situation. What type of records should you keep? Any and all documents that may have an impact on your federal tax return. Organizing your receipts can be as simple as snapping a photo from your smart phone and thumbing some notes in your accounting app.
4. Less Stress
The burden of a disorganized accounting system can weigh heavy on your conscious and lead to extra levels of stress. Owning and operating a new business is so EXCITING and you should feel confident with your financial and tax obligations. While you may need to invest time and money now to get your bookkeeping up to date, you'll save yourself a major headache down the road.
5. Better Decisions
If you don't have a handle on your income and expenses, how do you know if you are actually making any money? Monitoring your financial health can help you make better decisions - before it's too late. Feel confident about hiring an assistant or purchasing a new, faster (expensive) piece of equipment. Utilize your books to make smarter choices. Your future success depends on how clearly you can see your business today.
Are ready to tackle that shoe box of receipts, but aren't sure where to start? Why not consider hiring a professional to help look after your bookkeeping requirements so you can focus on what you love. Many business owners like the comfort and security of a highly skilled tax professional doing their daily books. Have peace of mind while we research tax regulations that have the most impact on your business and future deductions.