Bookkeeping Can Mean Sink or Swim for Your Small Business
With timely, accurate bookkeeping, you will always know the answers to these and other critical questions:
- Did your clients all pay on time last month?
- Will an office improvement be a smart use of your money?
- Do you have enough money to hire a part-time assistant?
Keeping careful books is a critical part of any business. And analyzing revenue and expenses can help you grow.
What Does a Bookkeeper Do, Exactly?
In the simplest terms, bookkeeping is the recording of the money coming in and the money going out. It includes tracking all financial transactions, including outlays like supplies and payroll–and income, like payments made by your customers.
It used to be a tedious task, but thanks to cloud-based software, bookkeeping is now a simpler process. Outsourcing the role to a professional is a cost-effective option, because it frees you up to focus on running your business.
Accurate records provide a picture of your business’ health anytime through statements showing your:
- assets, liabilities and equity
- cash flow
Thorough tracking of all your expenses can also help you plan for tomorrow, and respond quickly to tax information requests or audits.
Bookkeeping can help you avoid problems with the IRS, know where you stand, budget and maintain peace of mind:
- Keeping up with cash flow
If you’re unsure how much you spent on vendor services last quarter, you can quickly find out with good bookkeeping. Or, you can review how profitable this year’s clients were compared to last year’s.
Your financial statements can show you which products and services are your best revenue-generators. With this knowledge, you might decide to pivot to increase profits.
- Improving budgeting
Accurate books can show you expenses that were necessary at the time, but are no longer needed.
Before letting the ink dry on your new budget, see how things went over the past year. The insights you gain may double your revenue next year.
- Breathing easy
The flow of cash is a paramount struggle of people who start small businesses. Understanding bookkeeping’s value can be a big step in addressing that challenge.
Using bookkeeping based in the cloud, you always know how much money you’ve made and whether it will be enough for expenses on the near-horizon. If there isn’t enough to cover expenses, you can prepare as necessary before opening a line of credit or seeking out a loan.