Bookkeeping is the activity or occupation of keeping records of the financial affairs of a business. The importance of bookkeeping cannot be emphasized enough. Even if it isn’t something you’d like to address or manage yourself, the truth of the matter is that no business is successful if they do not properly monitor, manage and maintain their financial structure. Here are five reasons why bookkeeping is vital to the health and life of your business.
1. Without accurate and readily-available records, your company won’t have a clear picture of the finances and how they relate in real-time to reaching company milestones. You may miss out on opportunities or make them too soon under the impression that there is more or less business budget available for spending.
2. Say “goodbye” to a good night’s sleep. When your numbers are off, so is peace of mind. As business finances are one of the most critical aspects to any business, you will likely be worried all the time that CRA may audit you after a sloppy or inaccurate filing of taxes. Without proper record keeping, you can face thousands of dollars in backdated taxes; sometimes even have to consider bankruptcy all due to poor planning and incorrect information.
3. Unless you have a rich uncle somewhere that’s willing to finance your growth without proof of what your business has accomplished, financial options may become very limited. Before anyone lends or invests money, they want to see a proof of concept and a high likelihood that they will see a return on their money. Many financial institutions will not even entertain an application if the proper documentation and books aren’t presented and accurately updated.
4. The sooner the better. If you haven’t already started the bookkeeping process and its tax season, you can prepare to pay big bucks to an accountant who will have to recreate your books and compile your taxes for last-minute completion. These risks come with some serious premiums when outsourcing for time-sensitive help.
5. Cash flow gets tight and managing expenses can become very tricky without proper record keeping. While you are a well-meaning business owner, you may not be seeing the full picture and burning bridges or losing critical contracts with suppliers and vendors that you need to pay as a priority. It is important that you see all expenses coming out each month that you are able to identify which must be paid when and, worst case scenario, which services you can do without in the event of a slow month or emergency. A lot of money is also wasted on subscriptions that you or someone within your staff paid to download, ultimately stopped using and are still making monthly payments on. Flow bookkeeping helps you with identifying all of these monthly expenses and priorities.
Bookkeeping can “make or break” your business, so take some time to understand why it is so important and the many ways that Flow Bookkeeping can help your bottom line meet your top priority of business financing.