Every business owner has a lot to deal with and getting your books in order is one of them. In fact, this is one of the essentials when it comes to entrepreneurship.
The fact is that there is more to entrepreneurship nowadays than just launching a business. As a business owner, you are expected to put in the effort not only to ensure your business growth but also to take your business to the next level.
However, trying to handle everything yourself could have negative impacts on your business. This is because you may be too busy to pay attention to your business’s bookkeeping.
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Bookkeeping is extremely essential when it comes to entrepreneurship. However, what is bookkeeping and why do business owners have to keep accounting records?
Bookkeeping is a record of all of your business’s financial transactions. It’s one of the most important aspects of the business never to play with.
As a small business owner, it’s essential you understand the importance of bookkeeping. This is because it is a legal obligation of businesses to keep a proper record of their finances. The fact is that not keeping a track of your financial records may lead to serious consequences.
Getting your books in order
As a business owner, you have to think about your personal benefit. Also, it’s your responsibility to ensure the happiness and satisfaction of both your employees and clients. However, taking care of your financial records is an important aspect of the business too.
In fact, record keeping is essential for startup owners, self-employed and freelancers. As a business owner, hiring an accountant could be a great option for you.
However, it all depends on the size of your business and how good you are at numbers and keeping records. Thanks to great business tools like QuickBooks, you can keep your accounting records with ease.
The fact is that you should never overestimate your ability to handle your business finances if you want to take your business to the next level. You have to understand that there is more to financial books than just receipts and bank statements.
You can even use a platform like Bill.com to simplify your business bill payments. It’s the tool to use whether you’re hoping to cut time on data entry, pay vendors, or get paid by clients.
With these tools and others, you won’t have to shuffle through dozens of receipts to find the record of one particular transaction. Below are some of the reasons why you need to always get your business’s books in order today:
#1]. Tax payments
A lot of business owners don’t understand how beneficial proper financial records can be for tax payments. If you are based in the UK, you must keep your records for at least 5 years after the 31 January submission deadline of the relevant tax year.
HM Revenue and Customs (HMRC) may check your records to make sure you’re paying the right amount of tax. However, failure to keep records means you could face a fine of thousands of pounds from the HM Revenue and Customs.
Therefore, if your books aren’t in order — you have to spend a lot of time going through all the bank statements and receipts to prepare your tax returns at the end of the year.
But if your books are in order, your accountant can easily fill out year-end tax returns. Also, you should know that you could face tax problems if your financial records aren’t an accurate representation of your business activity.
Bookkeeping helps you with your personal tax payments too. When you know how much your business made, you’ll know how much you earned and that makes tax payments easy.
#2]. Business growth
Usually, small business owners fail when they don’t manage their financial records. The fact is that you can’t make a proper budget if you have no idea about your finances. However, without proper budgeting, you cannot plan for the future growth of your business.
With proper records, you’ll be able to tell which of your services bring in profit and which you shouldn’t be investing in. If you want to be able to make better investments in the future, then the analysis of your books can help.
Also, your financial records can help improve your expansion plans. As a small business owner, hiring a qualified accountant is an investment you should make. The benefit of a good accountant usually outweighs the disadvantages of not having one.
#3]. Impress investors
Nowadays, investors are essential to every business’s growth and ability to expand. However, no one will be interested in your business if there is a lack of proper bookkeeping.
The fact is that if your books are not in order, it leaves a bad impression. You will struggle to attract new investors or keep the investors you already have. This means you can lose your investors, and with them, your business.
In short, your bookkeeping will show your investors that you are serious about your business. Also, keeping your books in order will not only help you impress your investors but also helps your business to attract new investors.
With proper bookkeeping, your potential investors will be able to see how well your business is performing. As a matter of fact, they will be able to see all the records in detail and check the financial status of your business.
#4]. Improved cash flow
Cashflow is an integral part of running a successful business and it’s one of the reasons why you need to keep your books in order. You have to keep a record of every transaction and payment made in order to understand the state of your business finance.
Keeping track of all your payments could also help you become a smarter money manager. This is because you’ll be able to know about the outstanding invoices, and how to chase them and better manage your payments.
This is good when it comes to improving cash flow because you will be able to shorten the time limit for a vendor to pay. Additionally, you can even attempt to delay the payments of a few vendors by a day or two to ensure constant cash flow.
With bookkeeping, you’ll have a record of your business finances, a proper record of due payments, and chances of improving cash flow. Improved cash flow is not only better for business but is also good for your peace of mind.
We can all agree that running a business is not as easy as some people might think. As a business owner, you have many responsibilities on your shoulders but getting your books in order is the one that you should never ignore.
As you can see, no business owner can run a successful business without properly keeping their book in order. There are so many great benefits of bookkeeping; the aforementioned few are just the main benefits we think you should be aware of.