Most people don’t get excited about accurate bookkeeping. The following incentives may change your outlook.
1) Save money on your accounting and tax bill. Throw away the proverbial shoebox of receipts. With the ease of software programs and a little bit of guidance, you can keep good records yourself and save on your tax bill.
2) Enjoy more peace of mind. A major source of stress for business owners – especially for small and family businesses – is cash flow confusion. When clients start accurately tracking sales, receivables, expenses, inventory, cash flow, etc. – we see the weight come off their shoulders.
3) Avoid tax penalties. Income tax, self-employment tax, payroll tax, sales tax – how do you know what and when to pay if you don’t keep track? And with tax rules constantly changing – sometimes in effect for only part of the year – it’s easy to forget payment deadlines, not pay in enough, or be surprised by how much is owed. Avoid the surprise as well as the penalty.
4) Prevent internal theft. It’s easy for a partner or an employee to hide the theft of company money. Accurate bookkeeping is the foundation of internal control.
5) Manage expenses better. It’s uncommon for everyone in a business to have disciplined spending habits. Unnecessary expenses creep in and erode profits. Accurate records allow you to reel in the problem areas and identify improvements.
6) Strategize for your future. Good records provide baselines and show trends, making forecasting much easier. Business owners may struggle with when to hire, invest in new software or equipment, or how to manage cash flow. Managing multiple marketing strategies and operational improvements can add to the confusion. Financial models help link strategies and forecasts for better decision making and faster growth.
7) Have a better conversation with your lender. In addition to past financial statements, lenders may ask about seasonality, growth trends, and future forecasts. If you don’t have confidence in your numbers, how can your lender have confidence in you?
8) Create one version of the truth. Business partners have to communicate with each other based on reality. Leaders need to manage employees with that same story. One version creates more clarity and less emotion.
The numbers don’t lie. Whether you do it yourself, delegate, or outsource, it’s critical to understand the many benefits of accurate bookkeeping. The extra profit, less stress, and better strategies will lead to faster business growth.
Alisa Livesay
