A business’ life force comes from its finances. Knowing the health of your business comes from accurate accounting and bookkeeping practices. This allows for your business to sustain, grow and maintain business standards of excellence. Here are the top 5 reasons why proper bookkeeping and accounting is crucial to business success:
- Business Planning: Keeping accurate records allows you to create budgets, plan for necessary purchases and cover unforeseen expenses. By maintaining an accurate general ledger you will be able to monitor and manage your cash flow. Ask yourself: Do I have the funds to continue operation through the slow months?
- Business Deadlines: This has to do with paying your bills on time. Knowing how much cash you have on hand gives you the ability to make on time payments for loans, rent, taxes, utilities, and other unforeseen expenses.
- Business Goals: Having the ability to know what your financial health is at any given time allows you to prepare the business for growth or for downsizing during slow seasons.
- Tax Preparation: Do you tremble at the word audit? Having proper financial practices in place will give you the peace of mind that in the event of an audit you have nothing to worry about. Besides the potential of an audit keeping your books balanced and accurate will prove to be beneficial at the end of the year when you file yearly taxes.
- Business Performance: Business performance is crucial to know. This is where you discern whether the business is, growing, failing, or staying the same. It is from proper accounting that you can generate accurate reports. These reports are what show your business’ financial health.
Whether you decide to get trained or hire an outside source to manage your books and create accurate bookkeeping records the importance of these records remains the same. Accounting is the checks and balances system to your business, when it is done properly the potential for business growth is vast. Conversely, if finances are ignored a business can shut down overnight. Educate yourself on accounting 101 to ensure that your business has the capabilities to achieve your business dreams and goals.