Bookkeeping is an integral part of business management. Bookkeeping is the process of recording and maintaining financial transactions for your business, and it’s a great way to generate a detailed financial overview for your business whenever you need it. The discipline of bookkeeping accounts for a large proportion of the accounting process. By working with a bookkeeper every month, your finances are organized and ready to go for your accountant when it comes time to file your tax return in a timely manner. Simply put, a bookkeeper keeps the financial records of a company. These records are not only essential for the success of a business, but they are also required by law.
Tax preparation is a key reason to maintain a detailed set of books. The tax man will not be satisfied with records that are not properly logged. Not having a company’s books in order could be very detrimental to the company. Irregularities, embezzlement, and other forms of undisciplined and unprofessional acts could be done unnoticed. We are going to give you some reasons why it is essential that your business has a bookkeeper.
1) Bookkeeping is a very tedious process. Attempting it yourself could take from you valuable hours you could spend managing your business. A bookkeeper can spend a couple of hours a week keeping your paperwork up to date so you can relax or work more on your business. It is advisable to give the right task to the right person so that everybody would be happy. You have your books in order as a business owner, while the bookkeeper stays employed.
2) A bookkeeper does bookkeeping for a living. Not only would they spend less time doing the books than you would, they also know what they are doing since they are experts, therefore they will typically be more efficient and accurate in their work. Doing bookkeeping by yourself without knowing the key elements of the bookkeeping process can create some disastrous results. Those results may adversely affect your tax return. Not only that, but a subsequent FIRS audit may result in additional tax liabilities as well as open up other financial years for scrutiny. This is why you need a bookkeeping expert.
3) There is a legal requirement to have your business financial statements in order. If the state or federal government decide unexpectedly to undertake an audit on your business, it would be in your best interest to have your books up to date, giving them less time and less opportunity to snoop around in your affairs.
4) Having your books in order helps when you need to make a quick business decision that could affect you financially. When you’re able to clearly see how much revenue you generate every month, and exactly how you’re spending your money, it becomes obvious where potential problems and opportunities lie
5) With a bookkeeper working regularly on your financial transactions, they are more likely to notice emerging patterns and can bring important financial matters that you may have overlooked or not even noticed to your attention.
6) Well managed books will provide your Accountant with information to prepare the financial statements such as profit and loss, and a balance sheet on time They are also needed if you are applying for credit from financial institutions.
7) Keeping up to date with your paperwork avoids the risk of late payment of fees, penalties, and fines.
8) When you decide to sell your business, buyers will be able to see the true value of the business that you have worked so hard to develop by merely looking at your books.
9) You will be able to get up to date management reports. Some people run their business with little or no knowledge about the financial angle to it. They are operating, yet they have no idea if the business is operating at a profit or loss. They do not concern themselves with the day to day accounting, but rather get their financial figures from their accountant which is prepared annually. At this point, it may be very late in the day to make any change to save your business. A bookkeeper, however, can give you up to date figures; weekly, fortnightly, or monthly, depending on how often you need the records. This information could be critical to the success of your business.
Regardless of the size of your company, good bookkeeping practices are essential to keeping your business running smoothly. Accurately kept books do more than making it easy to file your annual tax returns. A quick review of your books can show where you need to spend more or less money, who gives you the most business and who takes the longest to pay you, and how much you are spending compared to how much you’re making.
At PML, we offer more than bespoke bookkeeping services to help small business grow. You don’t need an in-house bookkeeper. Talk to us today.