A Guide to Knowing Why Small Businesses Need Bookkeeping
Running a small business can be rewarding but has its fair share of challenges. On the one hand, small business owners can turn their passion into a career, be their boss, and have greater control over their work-life balance. On the other hand, operating a local establishment can be highly stressful because you must learn to handle many responsibilities.
One dreaded but necessary task you should never overlook is bookkeeping. This fundamental aspect involves recording, organizing, and maintaining your business's financial transactions. It's also one of the foundations of monetary stability and growth, especially if you hire an expert to help with that.
If you're ready to stay afloat, this article will explain why bookkeeping matters and how it benefits your establishment.
Why Does Bookkeeping Matter for Small Businesses?
Tracking your small business's financial transactions helps organize, store, and analyze financial information to conclude the building's financial security. The Internal Revenue Service (IRS) also requires establishments to maintain records of gross receipts, purchases, expenses, assets, travel, transportation, entertainment, gift expenses, and employment taxes (if applicable).
What Happens If You Don't Record Your Finances?
Not doing so will make you struggle to report necessary information to the government. If you do it inaccurately or not, it may result in stressful penalties and hefty fines.
5 Ways Regular Bookkeeping Can Help Your Establishment
No small business owner wants to consider managing their finances while handling other essential tasks. However, it's necessary to avoid headaches from government officials. Here's how daily bookkeeping can benefit your company.
1. Make Informed Decisions
A successful business begins when you make choices, but that only works if you pick the right one. Simple bookkeeping for small businesses can make decision-making easier for business owners when applying for loans, submitting grant applications, or hiring employees.
Business owners and their accountants can also make informed decisions using accounting data. They can analyze the information to determine if they have the financial resources to hire new employees. That way, they can decide if adding someone to their payroll is feasible.
2. Organize Records
Organizing your financial records is vital for any company, regardless of your current situation. Bookkeeping is essential in budgeting, applying for loans or grants, and determining if you are making a profit. It also helps you keep all the financial data in one place, making analyzing and visualizing your business finances more manageable.
Moreover, it helps you plan your bill payments by tracking their due dates, allowing you to organize your expenses effectively.
3. Create Accurate Financial Records
Making sound business decisions begin when you have easily accessible, reliable information. When you regularly organize your data, you can maintain precise financial records. These records help determine how much you spent on office supplies last year. Instead of manually calculating every expense from receipts, you can easily access the data from your recorded transactions.
4. Budget the Money Properly
Keeping well-organized financial records for a small business helps manage finances, set budgets, and make informed decisions for the future. Analyzing past data can help with planning for growth, adjusting budgets, and responding to changes in supplier costs.
Also, accurate accounting helps with budgeting by revealing overspending or cost-saving measures and showing whether the business is over or under budget.
5. File Taxes
All business owners know that filing taxes for a company can be daunting, but it's mandatory. Hiring an accountant can make things easier, and having well-organized accounting records can save time and potentially result in tax deductions. Accurate bookkeeping can also come in handy during an IRS audit.
Organizing for a More Efficient Business
While no stressed business owner wants to spend their free time bookkeeping, it's necessary to help you stay organized, make informed choices, and avoid legal trouble. You can enjoy these benefits by doing this task daily and seeking professional assistance when needed.
If your small business needs help with bookkeeping in New York City, contact Yasso Bookkeeping Solutions! Our firm offers professional services to help your establishment be more efficient and competitive. Schedule a call now!