Why is Bookkeeping Important?
Why is Bookkeeping Important?
Bookkeeping helps a business organize and maintain accurate finances, which helps understand the financial health of an organization. Unfortunately, bookkeeping is overlooked when it comes to important business operations. By law, an organization is required to keep accurate financial records, but bookkeeping has other benefits. Here are 20 reasons why your business needs to hire a professional bookkeeping company to handle your finances:
Bookkeeping gives you the ability to look at past performance, and plan for the future. Bookkeeping helps pain a clear picture of what's working and what isn't. Bookkeeping helps for strategic planning, especially regarding taxes. Your CPA will have the necessary information to categorize revenue and expenses.
Management uses bookkeeping to measure business performance. Financial statements are the product of bookkeeping, and should be produced regularly for analysis. Through this financial analysis, you can better measure cash flow. You will be able to identify and strengthen your business's weaknesses.
Being able to find the necessary financial information at the right time is essential for speed and efficiency. Also, organizations like the IRS, employees, and investors are all interested in your financial records. Being able to provide your financial information keeps you from paying additional fees, and will help facilitate cash flow from investors. Being disorganized could stress these existing relationships.
In order to make the best decisions for your business, you need access to the best information. This information is provided with proper bookkeeping services. You can't make profitable decisions without the right financial information.
Bookkeeping is highly important because it allows you to create accurate budgets. If your income and expenses are organized correctly, it becomes easier to determine where your money goes. A budget also helps you create a financial roadmap. You will be able to plan for future expenses, and reserve resources for those expenses.
Your business likely has to file tax returns every year. Instead of rushing to find receipt and missing paperwork, filing taxes can be less stressful by outsourcing your bookkeeping to a company like True North. Bookkeeping also has an impact on your personal tax returns. The majority of your income as a business owner is from earned wages. To know how much money you made, you need to understand how much money your business made. By having the correct bookkeeping system and service providers in place, you can be sure your bookkeeping is organized and your financial statements are readily available.
An investor will want to know how your business is performing financially so they can measure the value of their investment. By keeping accurate books you will be able to provide accurate financial statements that show the health of your organization. Bookkeeping provides investors with up-to-date information, so they can make thee right decisions.
Bookkeeping is also beneficial for future investors as well. If you have a long track record of accurate financial statements, investors will feel more comfortable investing in your business.
Peace of Mind
Keeping accurate books will also help with your state of mind. You have enough going on; the last thing you need is your bookkeeping adding to the stress of running a business. With accurate bookkeeping, you can relax knowing your financial records are up to date and correct.
Accurate bookkeeping also helps track and measure cash flow. Developing a system to track revenue, expenses, liabilities, and accounts receivable will help track when invoices are paid. Since bookkeeping has information regarding outstanding invoices, this can be used to implement policies that improve cashflow
Strategic planning is a highly important aspect of running a businesses. Bookkeeping allows you to get closer to your goals. Use the information from your books to focus on strategy, and plan your goals accordingly.
Get a Snapshot of Your Business
Bookkeeping provides financial information about your company. Financial statements like the balance sheet, income statement, and statement of cash-flow provide valuable financial information for a period of time.
These snapshots help understand what happened inside a business within a given period of time.
If you're audited by the IRS, you'll want your books to be in order. Disorganized books make the process longer, and make your business more susceptible to penalties and late fees.
It's the Law
The law requires you to keep financial records separate from your personal expenses. Failing to do so, can lead to termination of your business.
What Our Clients Say
I've been with True North for six years. They know me, they know my people, and they know my business. True North is a valuable business partner.
True North has been instrumental in allowing me to grow my business. No matter how complex the financial concern, I know I can count on True North to guide us through the issue.
True North has been so welcoming to our new business, Superior Marine Services. We truly appreciate all of their hard work. We highly recommend any of their services. Class Act! Thanks True North!