As a business owner, you must have a lot on your mind all the time. Before you think about your personal benefit, ensure the happiness and satisfaction of both your employees and clients. Trying to handle everything makes you turn your attention away from important aspects of business and that is taking care of your financial records.
Many small businesses fail because they don’t understand the importance of bookkeeping. Bookkeeping is a record of all of your business’ financial transactions. It is a legal obligation of businesses to keep a proper record of their finances. Not keeping a track of your financial records may lead to consequences.
Many business owners overestimate their ability to handle finances but financial books are a lot more than receipts and statements. It is better to hire an accountant to handle everything for you. This way, when the time comes, you won’t have to shuffle through dozens of receipts to find the record of one particular transaction.
Here are five reasons why you need to get your books in order today:
1. Tax payments
A lot of business owners don’t understand how beneficial proper financial records can be for tax payments. If your books aren’t in order — you have to spend a lot of time going through all the bank statements and receipts to prepare your tax returns at the end of the year. But if your books are in order, your accountant easily fills out year-end tax returns. If your financial records aren’t an
Bookkeeping helps you with your personal tax payments too. When you know how much your business made, you know how much you earned too and that makes tax payments easy for you.
2. Growth of business
Small businesses fail when they don’t manage their financial records. When you have no idea about your finances, you can’t make a proper budget and without proper budgeting, you cannot plan for future. Proper records tell you which of your services bring in profit and which you shouldn’t be investing in. The analysis of your books help you make better investments in the future. Your financial records improve your expansion plans.
Hiring a qualified accountant is an investment that small businesses should make as quickly as they can. And if you are worried too much about having to pay the accountant, you should know that not all the accountants in Surbiton cost a fortune. The benefit of a good accountant outweighs the disadvantage of not having one by a huge margin.
3. Impress investors
Every business relies on its investors but small businesses cannot survive a day without them. You cannot ask anyone to invest in your business if you are not taking that business seriously yourself. If your books are not in order, it leaves a bad impression on your investors. You can lose your investors, and with them, your business.
Bookkeeping lets your investors know that you are serious about your business. Not only do your organized books help you impress your current investors, they also help you pitch your business to new investors. When you present your data to potential investors, they see all the records in detail and check the financial status of your business.
4. Help with hiring
Sometimes, businesses need experts in their team but they don’t hire them thinking they can’t afford them. The reason behind that is that they don’t keep proper financial records of their business and as a result they don’t know what they can and cannot do from the money they have. In most cases, they don’t even know how much money they have. Even a successful business can fail— if you think you don’t need them, think again.
5. Improved cash flow
Running a business is quite different than normal life. You can’t expect people to pay you back whenever and not keep a record of the loan. Since most small businesses don’t regulate payments—cash flows cause financial problems for the business. When you keep track of all your payments, you know about the outstanding invoices. Shorten the time limit in which a vendor has to pay to improve the cash flow.
Delay the payments of a few vendors by a day or two to make sure you have constant cash flow. Improved cash flow is not only better for business but it is also good for your peace of mind. Without bookkeeping, you have no record of your finances, no proper record of due payments, and no chances of improving cash flow. The stress of it all leads to restless nights. But bookkeeping can help you avoid all that stress.
As a business owner, you have many responsibilities on your shoulders but getting your books in order is the one that you shouldn’t ignore.