A great bookkeeping system makes your life a million times easier. Programs like Quickbooks can solve a lot of financial trouble, or at the very least help you stay organized. Once you know how to set up a great bookkeeping system, the question is: why does great bookkeeping even matter? Tracking your finances, setting up invoices, etc – what is the point? Can’t I just do this myself?
Once you get familiar with your own bookkeeping software, you’ll get hooked. Here’s why.
A Friend of the Small Business
Programs like Quickbooks are designed to help small businesses track their finances. When used correctly, your records could save your business from trouble. Tracking your finances and your payroll, among other things, are key components to keeping your business afloat and successful. With proper bookkeeping, these tasks are much easier.
When your income records are organized, you can better understand your business’s cash flow. It also allows owners to:
- Better understand where profits lie
- Ensure employees are paid correctly and on time
- Help with invoicing customers in many cases
So what does this all mean for businesses, and why does bookkeeping matter?
Offers Insight Into Overall Success of the Business
Business owners want to know if they are successful. They want their business running smoothly, with all finances in order:
- If there is unnecessary spending, they want to know where.
- If cuts can or should be made, they need to know.
- Employees are the lifeblood of a business, so they want to be sure employees are paid the right amount at the right time.
All of this can be accomplished with an efficient bookkeeping system.
Most of these programs can produce reports that give an overall snapshot of the company’s finances. These reports help with cash flow projections of businesses, so owners can get a better idea of how their company is doing. Understanding where the money is going and having an idea about income also helps owners plan expansions and fine-tune the operations.
Makes Filing Taxes Less Complicated
Even as an individual, filing taxes can be a nightmare. If you are new to the business world, you probably dread filing taxes every year. The good news is, with the right record-keeping system, taxes will be a hundred times easier.
Having organized workbooks and clean spreadsheets will make filling out tax documents a simpler task. Whether you do them yourself or hire an accountant, keeping organized books makes tax season a little less panic-inducing.
Helps During an Audit
Any business is at risk for being audited. If all of your business’s finances are already in one organized space, the audit will proceed far smoother. Having all of this information in a convenient place with only a few clicks can save you from a lot of possible penalties or late fees.
No one wants to experience being audited, but it’s always better to be prepared anyway.
Stay In Bounds of the Law
Every business is subject to their own regulations. Each type of industry has different regulations each company must follow. Most must have up to date and accurate records regarding payments and fees.
This can be created and stored in a great bookkeeping system. Most can be programmed to:
- Automatically send out invoices to customers
- Print a copy for physical records
- Store records in the system
You can also choose to organize transactions by class with some programs. Ultimately the way you organize your books is up to you, as long as you know how to navigate it.
Reports to Investors
Many small businesses have investors or partners who are interested in the financial well-being of their investment. With the right bookkeeping set up, all of the information they need is available in an organized format. In many cases, you can create multiple users for one book, with different levels of access. You can provide investors with a “Read Only” level access to the books, so that they can track the business without you having to do extra work to get them the statistics. Keep the investors happy!
Many bookkeeping programs exist, though Quickbooks may be the most widely known. All of them are designed to make it easier for people and businesses to track and organize their income. A business with accurate financial records is more likely to thrive than one without.
If you are a small business owner that is unfamiliar with bookkeeping software, reach out to MI Tax CPA today for some help!