Most startups and small businesses fail because of poor money management. Yet over 60% of small businesses say they don’t know enough about their finances. Knowing the importance of bookkeeping can make the difference between becoming a statistic and living out your dream. You don’t want to be a random number in a random study, right? I have some great news for you! You don’t have to. Keep reading – a future version of yourself will look back and say “thank you.” Let’s get started!
What Is Bookkeeping?
Bookkeeping is the daily practice of tracking the cash-flow for your business. Although it’s not the same as accounting, they do cover similar bases.
Why Is Bookkeeping so Important?
Bookkeeping is often overlooked or considered as an afterthought. But, by the end of this article, you’ll understand how important it is for turning your startup into a thriving business.
1. It Might Be Required by Law
Depending on the legal structure of your business, you may be legally required to keep detailed financial records. Additionally, you should always keep personal and business finances separate. Bookkeeping allows you to fulfill these legal regulations. You’ll already have detailed records in case you ever need them. It’ll also help avoid any confusion between your personal and business accounts.
2. Make Filing Business Taxes a Breeze
spend over 80 hours a year preparing their taxes. Yikes. Whether you plan on doing your own taxes or hiring a professional, you’ll get some of that time back. Exceptional bookkeeping records will make things run smoothly when tax season rolls around. Plus, you won’t have to dig through a hoard of receipts in your top desk drawer. And you’ll spare yourself the trouble of squinting at credit card statements at 2 AM trying to remember what you did eight months ago.
3. Make Educated Business and Financial Decisions
The future of your business relies on the decisions you make today. How much of your profit are you going to invest back into your business? How much are you going to pay yourself? These aren’t easy questions to answer if you don’t know how much profit you’re bringing in. Good bookkeeping records provide powerful insight into the inner workings of your business. You can use these insights to make educated decisions about your investments, your inventory (if you have any), and daily operations.
4. Analyze Your Business’s Growth
Detailed records don’t lie about profitability. This information can help you analyze your strong points and shine a light on areas that may need improvement. Bookkeeping can provide insight into the growth and future potential of your business. Additionally, this data can help you analyze how your business is evolving over time.
5. Plan for a Successful Future
Understanding the analytics we talked about will help you set realistic yet forward-thinking milestones for the future of your business. Where will you be this time next year? What about five years from now? The satisfaction of crushing your goals is one of the many reasons your hard work is so rewarding.
Alright, I’m in. How Do I Get Started?
We know you’re busy and we’re here to help. Let’s get in touch so we can chat about the best way for us to help you help your business. We’ll handle the bookkeeping while you handle the other million and seven moving parts of running a startup.