7 Must Know Facts About Importance Of Bookkeeping

Home > Blog > Bookkeeping > 7 Must Know Facts About Importance Of Bookkeeping
7 Must Know Facts About Importance Of Bookkeeping

Book-keeping and Accounting are one of the critical aspects of managing your business. It is an integral process that many firms, especially startups and small businesses, fail to implement wisely. There are a lot of rules and laws to keep in mind while maintaining accurate records and books. Failing to do so will lead to ‘poor accounting’ which is one of the top reasons why businesses fail. It is rightly said that without right bookkeeping or accounting, you are blindly driving your business.

Here are a few reasons that signify the importance of bookkeeping and marketing:

  • Helps You Budget Wisely: Bookkeeping and Accounting means organizing of your income and expenses. Thus it becomes easy to review your financial resources and expenses. A budget, in layman’s language, is a roadmap for your business. This helps you to plan your future payments in accordance with your anticipated income.
  • Plan Your Taxes

Every business has to file a tax return every year. The tax filing process is a tiring one that can be made easier and simpler by having a systematic accounting system organized on one central system.

  • Assists with Business Analysis

Bookkeeping and Accounting are two main tools used by management, auditors and stakeholders to analyze business performance. The end product of bookkeeping is Financial Statements. The business analysis allows you to get vital information such as identify the changes needed in current processes, know which business lines are working and which are not, focus on weaknesses to overcome them and more.

  • Improve Decision Making

Business Analysis leads to better decision making. The habit of systematic bookkeeping will always enable you to make profitable and viable decisions. Also, one would anyways require factual financial information to back your decisions and take necessary actions if needed.

  • Easy Reporting To Investors

Systematic bookkeeping will enable you to give information regarding the financial performance of your business. This will allow them to have up-to-date information about your business, letting them make better and well-informed decisions. Also, systematic bookkeeping will invite prospective investors. Investors will refrain from investing in a company which doesn’t have organized or accessible financial records.

  • Track Your Growth and Profit

Bookkeeping helps you in tracking growth since they reflect your business’s profitability. Over a period of time, you will accumulate data ranging over several years, thus enabling you to observe trends. This will give you a clear idea and a better understanding of how well your business has performed and what your growth percentage is.

  • Improve Your Cashflow

Bookkeeping allows you to track your liabilities, receivables, expenses, and revenues and keep a check on how and when your customer/vendor invoices are paid. Thus, you can keep a clear note on every information regarding your outstanding invoices, including the small details like date issued, vendor name, amount and so on. This information can be used to implement better cash flow policies, thus improving your cash flow.

Smart Business Consultants is an experienced and Smart provider of accounting services for small businesses and startups. The company provides Bookkeeping services, Accounting services CFO/Controller, and Payroll services for businesses all over the United States. Smart Business Consultants offer virtual accounting services and bookkeeping solutions that can be outsourced, proving to be a great convenience for startups and small businesses.

Leave a Reply

Your email address will not be published. Required fields are marked *