If you run your own business, it’s likely that bookkeeping is not your favourite part of it. In fact, we will take a guess that it is your least favourite part! But whether you like it or not, bookkeeping in business is crucial.
Here are nine reasons bookkeeping is imperative for your business.
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Ease the burden at tax time
No one likes tax time. Whether you are preparing the tax returns yourself or having them prepared for you, it is inevitable that you will find yourself scrambling around beforehand to find the required documents. These documents include profit and loss statements, Balance Sheets, cash flow, receipts, invoices and a myriad of records pertinent to your particular business.
To make things easier at this time, you need to have all your records ready.
Effective and regular bookkeeping will make tax time a thousand times easier, because it allows you to easily access the financial information you need, at a moment’s notice.
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Simplify cash flow analysis and management
Effective bookkeeping, allows you to analyse and manage your cash flow.
This ensures you pay vendor invoices by the due date and helps you to identify where you may be overspending.
Most importantly, effective bookkeeping allows you to keep better track of the money coming in and going out.
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Keep informed
It is important for businesses to stay informed of every transaction and the details of each in every business dealing. Without knowing what is going on, you cannot make the best decisions for your business.
Having this information at your fingertips will help you to ascertain where you seem to have the most expenses and give insight into where to invest in the future.
Become more informed and stay that way by putting effective bookkeeping practices into place today.
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Keep your investors ‘in the know’
Another benefit of bookkeeping, is the ability to keep your investors ‘in the know’. Keeping them fully informed leads to better rapport and a stronger business relationship. With this, comes the likelihood of increasing the opportunity to receive more funding, when needed.
Keep your investors informed by supplying them with graphs, charts, and any other information they require – and all at a moment’s notice.
An efficient bookkeeping service will show you how.
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Abide by the law
Does the thought of an impending audit send you running for the hills? No one wants to think about an audit. However, there is more to bookkeeping than simply trying to avoid one.
Did you know that keeping financial records is a legal requirement?
The Australian Government states:
“Under tax law, you must keep records to record and explain your business transactions. You’re required to keep records relating to income tax, Goods and Services Tax (GST), payments to employees and business payments.”
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Have easy access
Whether it is for an audit, preparing for tax time or keeping your investors in the know, searching for financial records can be painful. No matter what you are searching for or what the reason is, Effective bookkeeping practices ensure you have easy access to it all.
Accounting Software such as MYOB and Xero, allow you to locate those much needed financial records at the click of a button.
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Save time
On the same note as easier access, bookkeeping saves you time.
Keeping your bookkeeping up to date allows you to not have to search long to access the documents you need. Establishing an effective bookkeeping system means you will be able to locate a payment date, or receipt of an overdue invoice, quite simply – at a click of a button.
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Be organised
Whilst staying organised simply makes sense, when you are organised, you feel better and when you feel better, you think better, and when you think better, you of course work better and when you work better, your business does better.
Bookkeeping helps you be organised within your business, which helps keep your blood pressure low and your mind calm.
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Be proactive
Organised bookkeeping, allows you to effectively plan and be proactive in your business.
Why? Because by accessing everything you need easily and having a clear picture of your financial situation, you are better able to make plans for your business’ future.
Now that you understand more about the benefits of bookkeeping, you can see why it is such an important practice in any business.
