I know bookkeeping isn’t everyone’s favorite thing. But there is no doubt that bookkeeping is hugely important and necessary for small businesses.
And yes, bookkeeping is different from accounting. However, it has an equally essential role in your business.
To review, bookkeeping is the scaffolding that all other business processes rest on. Accounting and tax filings, financial reporting, HR compliance…. all these areas of your business use bookkeeping records.
Bookkeepers record each and every one of your company’s financial transactions. With that data, they generate reports for accountants, leadership teams, investors and others.
Without good bookkeeping, every other business process is subject to error or instability.
Here are several big reasons why bookkeeping is so necessary for your small biz:
Bookkeeping Makes Taxes Easier
This one seems obvious, but it’s so important to remember!
1. You’ll save on professional fees
If you dump all of your info on your accountant and expect them to organize it all for you, then you risk getting charged more for the extra work (and paying a premium for a rush charge).
2. The IRS requires it.
According to the IRS, YOU as the business owner assume responsibility for keeping accurate records of your financial expenses and income. Anyone can be audited at any time.
3. LOW STRESS
Taxes suck. Don’t stress yourself out by saving all of your record keeping until the end of the year!
You can lose track of receipts, payments… you can forget about that one $49 Instagram course you bought (remember Training and Education is tax deductible!).
Shoddy, last minute bookkeeping means potentially missing out on important tax deductions (and this leads to higher tax bills!).
P.S. If you need help getting caught up on your bookkeeping, check out The Easy Bookkeeping System.
Bookkeeping Can Save You Money
There are two things to consider here:
1. Discovering profit leaks in your business. For example: good bookkeeping can tell you when you’re wasting money paying for software subscriptions that you no longer use or need!
2. Understanding which of your products or services are selling best. This helps you funnel more energy (and more money) into products and services you know your audience actually wants!
More Time to Invest in Your Business
I’ve been in the bookkeeping industry for over 25 years. And I can tell you that the small business owners who go the farthest are the ones who acknowledge what is and is not in their zone of genius.
Those who are willing to invest in delegating tasks to others have more time to dedicate to the things that make their business SHINE.
Focusing on tasks that either infuriate you or simply aren’t your strong suit will take away precious energy from your business.
Bookkeeping is so necessary for helping business owners focus less energy on the mundane, and more on the money-MAKING activities in their business.
Better Client Experience
Another reason why bookkeeping is so necessary for small business is that bookkeeping helps facilitate smoother client experiences.
Bookkeeping handles all of the money going in AND out of your business. It therefore helps you keep track of invoices and deliver them accurately (and in a timely manner). This is essential for a professional client experience.
When your finances are disorganized, invoices can be incorrect, missed, or late, all of which detract from a positive client experience.
And the more positive a client experience, the more likely that you’ll receive repeat business or referrals!
Moreover, when your finances are organized, you are better able to focus all attention on your clients. This, in turn, allows you to provide an exceptional customer experience.
Knowing Your Numbers is Empowering
The bottom line is that bookkeeping is so important, necessary, and helpful to you as a small business owner.
Keeping accurate track of your financial records (whether it’s done by you or a rockstar Good Cents Bookkeeper) helps keep valuable information about your business at your fingertips.
When you understand what is going on financially with your business, you become more excited and involved in the overall growth of your business.
You can walk into your accountant’s office feeling confident that you understand where your business sits financially. And you can be the sophisticated business owner of your dreams.
Ya see? Bookkeeping matters!