Why Is Bookkeeping Important For Small Businesses?

As a small business owner, bookkeeping may be one of your least favorite tasks but it’s certainly one of your most important. Without up-to-date books, you lack a clear picture of your company’s financial position. Most important business decisions are (or should be) based on the current financial position of your business and making decisions without the right information can be costly for you and your business.

How is bookkeeping different from accounting?

While both bookkeeping and accounting play an important part in the financial health of your business and share common goals, they do differ in their roles. Bookkeeping focuses on the recording and organizing of a company’s financial transactions. Accounting focuses on the analysis and interpretation of that financial data to provide insights into the company’s current and future financial health.

Why is bookkeeping important?

Not only are you required by law to maintain your financial records, but accurate financial records play an important part in so many different elements of your business…

• Decision Making
• Budgeting
• Measuring Cash Flow
• Tax Preparation
• Strategic Planning

What exactly does a bookkeeper do?

Bookkeepers are tasked with collecting, organizing and recording the financial transactions and records of a business. They’re responsible for…

• Recording All Financial Transactions
• Generating Financial Statements: Income Statement, Balance Sheet, Cash Flow Statement and Statement of Changes in Equity
• Reconciling Bank Statements
• Managing Accounts Receivable
• Managing Accounts Payable

How do I know it’s time to outsource my company’s bookkeeping?

As your business grows, it will become more and more difficult to dedicate the time necessary to manage your books on a regular basis. Since your focus should be on growing your business, tasks (like bookkeeping) should be delegated to others. Outsourcing your bookkeeping gives you the expertise you need for your business without adding another person to your payroll.

Not sure you’re ready to outsource? Here are 5 signs that it’s time to consider it…

1. You don’t have time to maintain your bookkeeping on a regular basis.
2. Your books aren’t consistently up to date.
3. Sales are up, but your profits aren’t. Proper financial statements can help identify where money has been spent, where costs can be cut and where your spending is in relation to your budget.
4. You’re scrambling at tax time to get your financials in order.
5. You missed tax deductions. While they aren’t accountants, bookkeepers are still aware of tax laws and know what you need to track in order to take deductions on your returns.

Ready to get your books in order?

Contact us today to get started.