5 Top Reasons Bookkeeping is so Critical for Businesses

To run a successful business, you need to master the art of bookkeeping. There’s no way around it. Think of bookkeeping as the foundation of a house - you can’t build anything else unless that foundation is solid. 

In this blog, we’ll discuss why diligent and accurate bookkeeping is so essential for businesses. We’ll also cover how to use bookkeeping as the foundation of business planning, taxes, and more.

Let’s dive in. 

What is Bookkeeping?
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Bookkeeping is the financial management portion of your business. It involves recording your company’s financial transactions, managing those records, ensuring accurate information, and reconciling the monthly financial “books.”

Good financial record-keeping allows business owners to get an accurate picture of their company’s finances and make decisions accordingly. 

Outsourcing your books also removes some to-dos from your list. The less you worry about financial record-keeping, the more time you have to think about other things, like growing your business! 

Are you concerned about the cost of hiring someone to do your books? Here at Elevated Advisory & Accounting, we support businesses that use Quickbooks Online or Quickbooks Desktop. This allows the business owner to do some of the work and keep costs down while we support you by reviewing and reconciling the financial records and helping you prep for year-end taxes!

 5 Reasons Good Bookkeeping Matters
 
Here are just a few of the reasons that keeping accurate books for your company is so important:

1. Good books allow you to see where your business is more or less profitable For your business to succeed, you need to understand its profitability. While your revenue may be growing, your expenses may also increase quickly. In this case, your business will be less profitable. Understanding profitability is critical to scaling your business, but it’s impossible without good books. 

2. Good books allow you to estimate your tax liability accurately Tax time can be stressful for businesses, especially if you’re not sure what you’ll owe at the end of the year. Fortunately, having a streamlined financial process allows you to accurately estimate your tax liability at the end of the year. That means no more unexpected tax bills! 

3. Good books help you understand your cash flowCash flow problems are common for small businesses. In fact, small businesses of all sizes consider cash flow to be one of their top 5 challenges. When small businesses fail, 60% cite cash flow problems as the cause. 

Fortunately, it’s easy to avoid cash flow issues by keeping good books. Accurate, detail-oriented bookkeeping allows you to track payments received and funds spent. The result is a financial plan that makes it possible to allocate earnings accurately and ensure your company's financial security. 

4. Good books allow you to know if you need to make fixed-asset purchases at the end of the yearYour business will most likely pay taxes at the end of the year. If you’re dreading that tax bill, there are things you can do to reduce it. 

For example, making fixed-asset purchases at the end of the year is a great way to decrease your taxable income and lower your tax payments.

When you keep good books, you’ll be able to estimate your tax liability accurately and make asset purchase decisions based on that information. 

5. More peace of mindRunning a business is hard enough - disorganized finances shouldn’t make it harder. When your books are accurate, well-managed, and complete, you can sleep well at night knowing that your company is ready for anything. No more worrying about tax time, audits, or the IRS means more time to focus on doing what you love and growing your company. 

Should You Hire a Professional to Help With Your Books?

In a word - yes!

As we covered earlier in this post, keeping accurate books is critical for any business. Not only are things like tax filing and expense accounting compulsory for companies, but it’s impossible to grow sustainably without keeping detailed financial records.

Despite the importance of all those tasks, most business owners aren’t equipped or interested in doing that work.

And for a good reason - running a business is time-consuming, and few owners or managers also have the time to be accountants. 

Because of that, we strongly recommend hiring an accounting team to help. 

Think of an accounting service as your one-stop shop for financial well-being and peace of mind. Most (including us!) offer the following services:

Books
First and foremost, accounting services provide diligent and accurate bookkeeping. When you outsource your books to an accounting team, you can trust they’ll be accurate and comprehensive.

Services offered include income and expense tracking, entering transactions and reconciling bank statements, generating invoices and receiving payments, bill payments, and more. 

Payroll
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In addition to helping with the books, accounting services also handle payroll. This is a big deal for businesses since managers commonly struggle with payroll. 

Payroll can also cause significant problems for your company; one-quarter of workers have had paycheck errors, and 49% of said workers will start looking for a new job after two incorrect paychecks.  

In addition to preventing headaches and staffing issues for your company, outsourcing your payroll can help you avoid legal issues. For example, a professional accounting team will help you remain in compliance with the IRS and other payroll regulatory agencies.  

If you have multiple worker's comp codes, for example, you’ll need to track your employees' hours against those codes. If you don't, you could get charged at the highest work comp code rate for the entire employee. There are also new hire state reporting requirements that most people don't know about. Every time you hire someone new, you must submit a form to the state to notify them. 

Sound overwhelming? Don’t worry - a professional accountant can help with all of it. 
Streamline Your Finances and Keep Better Books - Starting Now!Stop struggling through your company’s finances alone - help is here. Elevated Advisory & Accounting provides comprehensive accounting and financial record-keeping services for businesses in Kalispell and the surrounding areas. 

Whether you need help with payroll, tax prep, or strategic decision-making, our team is here to guide you every step of the way. We’re committed to your company’s growth! We love working closely with local businesses to help them meet their goals.

Ready to learn more about our team or how we can help you? Contact us today to book your no-obligation consult call and learn how we can support your business.

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