Bookkeeping Basics for a Growing Business

Bookkeeping Basics for a Growing Business

Poor bookkeeping is a very simple, and easily avoidable, reason why some seemingly good businesses take a turn for the worse. Keeping an accurate record of the books is essential in understanding not only a company’s demands but also any financial rewards too. Not only that, but accurately-recorded books also provide current, up-to-date insight into the current financial situation. These basic bookkeeping elements are vital in assessing any future needs of a company, as well as identify any potential opportunities for growth. 

Why is bookkeeping important for my business?

First and foremost, if a company wishes to seek out continued funding or buyers in the future, it is of the utmost importance that accurate financial statements are held. When investors, lenders, and any other parties express interest in a company, they will want to view cleanly kept books that are easy to read. The concept is actually quite simple—if you want your company to reflect any profitability or consistency, start with the books because they would need to appear in the same manner.

Naturally, the strengths and weaknesses of a business are going to be important for the upper management of the said business, and while proper bookkeeping is an excellent way of staving off the hungry IRS auditors, it also builds a frame, outlining a business’s strengths and weaknesses. Quarterly reviews, which usually derive the bulk of their content from bookkeeping information, help the heads of business make accurate, informed decisions regarding the ultimate growth of the business, as well as aid in identifying any changes that may need to be sought after. Basically, if a business hopes to progress and be as prosperous as it possibly can be, it needs to be able to quickly access the important financial information, rather than take days (or longer) sifting through jumbled documents, slapped together and poorly kept.

Furthermore, with identity theft and other financial foes being prominent in contemporary business, it makes accurate books more essential than ever. This is because identity theft and seemingly simple errors will stick out quite obviously in a well-maintained set of books. If a bookkeeper neglects his or her duties in keeping accurate books, then what once was a seemingly small error, could blossom into a complete catastrophe, potentially leading up to a business’s ultimate demise.

So what are some signs of a good bookkeeper?

Organization

While accurate bookkeeping creates a sturdy foundation for a consistent portrayal of your company, the act does not go alone. Another key aspect of good basic bookkeeping lies in staying completely organized. One of the main goals of a good bookkeeper is found in his or her ability to retrieve the financial history of business at any point in time. Not only should the financial history by easily attainable, but it must be understood as well. Take receipts, for example. Those little, flimsy slips of paper that can seem so useless at first, can become the backbone for a business’s financial history. Therefore, a thorough and organized bookkeeper will have a space set aside, dedicated solely to save receipts.

Accuracy and Maintenance

Of course, then comes tax time, which can appear to sweep over a business rapidly sometimes. With such a tedious time-of-the-year approach, it becomes even more vital that accurate bookkeeping is carried out and maintained. A company seeking a profitable return will want to ensure that their bookkeeper is accounting for all of the various workings of the company, including receipts, expenses, and various other financial reports. Tax professionals will rely on these financial aspects to create an accurate efile for the company, hopefully yielding the most profitable return possible. Moreover, if there is one this a business does not need at tax time, it would be that intimidating audit from the IRS. However, if accurate and up-to-date books are maintained, then an appropriate defense against an audit has been formed.

Generally, it appears that the role of bookkeeping is often neglected. However, what most do not realize is that a good bookkeeper can be the difference between a business venture littered with success, or a business nightmare riddled with pitfalls at every stop. When hiring a bookkeeper, think of him or her just as you would a manager—you do not just want to hire anybody to fill the task. You will want a completely qualified individual, capable of getting the job done with little supervision. Besides, who would want an unqualified, less-than-knowledgeable person handling the overall financial information of a business?

Need help with basic bookkeeping? Schedule your free consultation today!

 

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