Updated: Nov 5, 2020
The Benefits Of Good Bookkeeping
Starting a business can be a little overwhelming. As the business grows, so does the paper work. What many people don’t think about is the behind the scenes activities that play a vital role in how well organized and really how profitable in the long run the business can be. Many business owners are passionate about what they do, and are busy with the normal day to day activities that are involved with making the business run and grow. However, at the end of the day there is usually a pile of paperwork that needs to be entered into the books, such as expense receipts, invoices, receivables, and so on. And lets be honest, who feels like sitting down to do all that after a long day of work.
If the records aren’t kept up on though, they can really start to pile up. In addition, it’s hard to know how much money is really available if all the activity is not reported (especially if it isn’t reported correctly) making it harder to make good decisions throughout the year, and ultimately making the business harder to run. Many people often try to tackle this part of the job on their own, trying to save money. Often what happens though is the books don’t get kept up on, things get miscategorized, and come tax time there is a mess to clean up.
Do it right the first time
Don’t get me wrong, trying to do things yourself isn’t always a bad thing. If you know what you’re doing, and have the time, then great, do it. But trying to just wing it, or leave it to figure out later can be costly. How so? If a business owner doesn’t keep up on the books, they may very well spend money they don’t have, write bounced checks, or end up owing a lot more on their taxes because they didn’t understand how to use business funds. In addition, when the records aren’t organized, categorized, and reconciled, it makes it difficult to prepare a tax return. So generally the cost to get that in order all at once during tax time costs more. Or maybe a business owner did do it themselves, but often times it is completely wrong, and has to be re-done. Sadly, it would have been cheaper to pay to have them done correctly the first time, in addition to saving the owner a bunch of time and frustration.
Tips to help
We understand that saving money where one can in business is always preferred. So whether doing the books yourself, or paying a qualified professional, here are a few tips to help stay organized.
Always have a separate business bank account.
Don’t use the business account for personal activities, i.e. grocery shopping, take-out for the family, a new couch, etc.
Use a program like QuickBooks to help keep everything in order and in one place. (Not a shoe box)
Reconcile your business statements at the end of every month.
Money well spent now is money saved later. Paying someone to keep up on your bookkeeping whether it is all of it, or just helping out a little each month is so worth it. Knowing where the business stands financially each month allows one to make good business decisions, and to focus on the other aspects of growing and running the business. It makes preparing taxes at the end of the year much easier and cheaper, and allows the business owner to have a good idea on what to expect heading into tax season. Getting a big tax bill is not fun, but getting a big “surprise” tax bill is even worse.
If you feel like you could benefit from getting help with your books, check out our friends at Better Balance Bookkeeping, and get help controlling the madness. And come tax time, we would love to help you prepare your return.