Bookkeeping can actually make or break your business. When they talk about half of all businesses going under, they often fail to mention why. It’s sad to say that many profitable business ventures actually go under simply due to poor bookkeeping practices.
Bookkeeping for entrepreneurs isn’t really that difficult. It’s all about recording what is coming in and what is going out. You need to do this for a variety of reasons such as so you can do your taxes, make good business decisions, and more. It’s much more than just knowing how much money you have.
• Helps Make Tax Time Easier – When you have everything organized, doing your taxes will take no time at all. In fact, if you have a typical small business, your taxes can literally be done within minutes using tax software. It also pays off if you have a tax accountant, because when you keep excellent track of everything properly your accountant can do their job better too.
• Supports Better Decision Making – When you have all the numbers right in front of you, it’s a lot easier to make the right choices about your business. You’ll be able to look at the numbers and know whether or not you’ve priced your products correctly, or need to discontinue some or bring in something new.
• Assists with Banking Needs – Sometimes, even small businesses need to get loans. The best way to be able to get a loan is with solid financial documents, which when done correctly can hold up as proof of income so that you can get loans when needed.
• Better Tracking of Accounts Payable – You want to ensure that you have good credit for your business, as well as maintain the right cash flow to support your business. If you have no idea who you owe and when the bill is due, you’ll have a hard time managing your cash flow.
• Better Tracking of Accounts Receivable – Just like you need to track what money is going out, you also need to track what money is coming in and what money is supposed to come in. If you don’t have a good handle on what is owed to you, you will have serious cash flow issues that can cause your business to go under.
• Helpful for Monitoring the Health of Your Business – When you do your bookkeeping right, you can truly monitor the health of your business. You can know if your advertising is working to promote your product. You can know down to the penny how much you made on each product or service you offer, so that you know when to adjust your prices up or down.
Bookkeeping for entrepreneurs isn’t hard, but it can be tedious. However, it is very important. Sadly, a lot of entrepreneurs get overwhelmed and don’t keep track of anything and have no idea where they stand.
Not keeping track of your income and expenses can cause a perfectly good business to fail. If you keep track of these things, you’ll give yourself a fighting chance to make it work. Plus, it’s not that hard to keep track. Today there is automation software that makes everything much easier for any entrepreneurs.
*This article is not intended to replace professional business advice and planning. Always contact professionals regarding any business advice, financials, planning, operations, and/or management.