Bookkeeping is a Priority and Here’s Why

As a business owner you’re busy running your business. You’re focused on what you do best which is the product or service you offer to your customers. The money part is probably the not-so-fun part of running a business and that leads to poor management of business funds. I get it. You’re busy but bookkeeping should be a priority and at the top of your business tasks and here’s why.

Tax time is less stressful with bookkeeping. Bookkeeping throughout the year will prepare you for tax time. No more looking for receipts, organizing statements and trying to remember your transactions before handing off your documents to your tax preparer. Those days are over because you have done this consistently over the last year. Less hassle means avoiding possible late payment penalties and missing out on tax deductions due to miscoded transactions. This is by far the most important reason why you should hire a bookkeeper.  

Up to date bookkeeping records will reveal slow and busy seasons in your business. This information is key in understanding when to make large purchases for your business and when to save to cover slow seasons. Also, having a clear understanding of your cash flow via your bookkeeping records is also important because this information is needed to secure business lending. Lenders will need to see how well your business performed in the past and how well your business is doing based on the financial books. It is important for lenders to see if you will be able to afford payments if given the opportunity to borrow money for your business.

Bookkeeping will help you to create future projections for your business and produce an overall financial growth plan. If you wish to increase revenue take a look at the books and decide how. Your bookkeeping efforts will reveal the next steps for your business growth strategy. The books may show that expenditures should be reduced or that you should focus on increasing sales by 10% in order to afford additional team members, the new office space or an overall business rebrand with a marketer. Whichever strategy you choose, it starts with bookkeeping.

Most business owners, especially those in the beginning years will elect to, “DIY,” their bookkeeping or do it themselves to save money. This option is cost-effective but requires consistent review of your business finances. I suggest to look over your books at least once per week. Create a habit of reviewing your numbers so you always know where you stand. Tools such as Quickbooks and Freshbooks are great software options to manage your books and even automate some of your bookkeeping tasks.

Eventually as your business begins to grow, you will need to hire a bookkeeper. Your role as CEO and the size of your business will impact your workload and schedule. This is the time a bookkeeper will help to keep your business finances in line at all times. It’s one less thing off of your plate but one very important task you know will be complete. Investing in a bookkeeper may sound like a large investment but I promise the return on investment is worth hiring a professional.

​Now that you know how important it is to keep up with your bookkeeping, it’s time to put in the work. The good thing is that it does not take much to get started with your bookkeeping. Start with today’s transactions and then decide to commit to getting it done on a consistent basis. If you need assistance with setting up your accounts or want to work with a professional, contact myself or one of my team members at Erica Booth Tax & Accounting Services, LLC. We’d be happy to help you get started or hand-off your bookkeeping to a professional. Give us a call at 610-713-5636 or click here to learn more.

Erica Booth is a tax expert, speaker, author and the Founder and CEO of Erica Booth Tax & Accounting Services, LLC. Based in Philadelphia, her firm specializes in taxes, tax planning and accounting for small businesses. Schedule a consultation with Erica Booth Tax & Accounting Services, LLC today to learn more about how we can help you with your business finances.