Benefits of Maintaining Clean Books
Bookkeeping – the fundamental recording and organization of day-to-day financial transactions of a business. These transactions include purchases, sales, receipts, and payments by an individual or the company as a whole.
Having clean and organized books provide key insights into the overall health of a business. Yet, many businesses end up failing due to poor accounting/bookkeeping. Without proper accounting or bookkeeping, you are essentially blindly driving your business.
Virtually every business owner would agree that having clean, well-organized books is imperative. But the process of actually maintaining clean books can be complicated, especially on your own. Bookkeeping requires many different tasks, and if you as a business owner are also the bookkeeper, you’re probably exhausted!
By maintaining your financial records, you’ll not only save time and avoid unnecessary expenses but you’ll also enjoy better performance over the long run. Here are some benefits of maintaining clean books:
Helps You Budget:
Knowing how to plan for projected expenses and revenue can be the difference between financial control and catatonia. Remember, your expenses cover everything from rent, utilities, payroll, materials, marketing, and other fixed or variable costs. If you’re not tracking where your dollars and cents end up each month, you’re most likely overlooking chances to cut costs or spending money where it might not have the greatest effect.
Tax Preparation:
Nothing is more annoying than scrambling through your desk trying to find missing paperwork, especially when it’s time to file your taxes. With proper bookkeeping in place, you can have all your financial transactions ready for tax season.
Helps with Analysis:
Bookkeeping is important for determining your business’ performance based on financial statement analysis. Running this type of analysis helps highlight where your business thrives and where it falls short.
Planning Made Easier:
Progress is often measured by comparing where you are today and where you used to be. With bookkeeping, you are able to compare past financial performances and use that information to better plan for the future. Planning is important in keeping things organized for your business. It also plays a major role in budgeting, tax preparation, and maintaining proper control of business operations. Bookkeeping will give you a well-defined sense of what works and what doesn’t work.
Track Growth and Profit:
When you’re able to compare results from previous years, it’ll help with tracking the growth of your business. Over time, the data that you gather will help you observe trends and gain a greater understanding of your business. Without proper bookkeeping, it is nearly impossible to measure the true success or failure of your business.
Bookkeeping will also show your business’ profitability. The routine recording of revenues, expenses, liabilities, and receivables, will allow you to track when invoices are paid. Cash flow matters to understanding a business’ profitability because it allows a business owner to know if the income exceeds its expenses. If so, then the company is considered to have a ‘positive’ cash flow.
Trouble-free Audits:
In the event of an audit, it is important to make sure your books are ready. Auditing can be a long process as it is, so in order to avoid making it lengthier, it is best to be able to provide whatever they are requesting in a timely manner. Plus, if your books are messy and disorganized, it gives the IRS more motivation to impose penalties while making your business subject to more fees.
With detailed recording, it means that your company is always compliant with the law. No matter the type of business you own, compliance with business tax laws is a must.
Peace of Mind:
Lastly, it’ll give you peace of mind knowing that you have all your ducks in a row. All things considered, bookkeeping is a key component to saving you time, money, and a headache. If you find yourself needing to enforce a bookkeeping process, consider hiring a bookkeeping professional to help.
Arias, Arias & Jasko Financial has been serving Florida and operating out of Fort Lauderdale since 2012. Arias, Arias & Jasko Financial takes pride in working with the owners and partners of small to medium-sized businesses to achieve their vision.
We have accounting and business consultant professionals on staff to serve you for all your accounting, bookkeeping, and business consulting needs.
The articles we share are items of interest and related to some questions we have answered in the past. If you have a question or would like to schedule an appointment please contact us at 954-650-1825.