As a business owner, there are many things that occupy your brain space on a daily basis. Often, these heavy topics include the health and well-being of your business, the vision for the future of your enterprise, execution of your strategy and finding the right personnel and technology to bring it to life.
Many entrepreneurs find themselves making decisions based on their intuition. If they are seasoned entrepreneurs, this voice in their heads has been a leading factor in the success that they might have already experienced. More often than not, intuition can get founders to a destination fast, but the destination may not be where they may have wanted to go. For this reason, intuition must be balanced with financial data that can give you a clear idea of where you are today, and what capacity you have to get to your desired outcome.
One of the best ways to do this is to employ bookkeeping to your business. While many business owners might overlook the importance of keeping clean books, once they start, they easily recognize that its benefits outweigh downsides such as costs and initial set-up time.
Here are five benefits of bookkeeping that every entrepreneur should take advantage off:
One of the biggest concerns for entrepreneurs is the dreaded tax liability that they anticipate every year. By keeping clean records of all of your transactions, your accountant will be able to use this information to efficiently prepare your taxes.
The data gained through this detailed recording will allow you to have an idea of how much you might owe at tax time as well as how you may be able to save money on taxes via business expenses.
A benefit of recording through bookkeeping is the business data that you’ll receive throughout the ongoing process. Metrics like profit and loss – which shows the company’s profit, revenue, and expenses – can be pivotal to successfully planning for growth. These reports and financial statements give you a look under the hood so that you can service your business where necessary.
Many business owners operate without this data that can result in mismanagement of funds, and costly mistakes down the road. With the insights from the organization of your books, you’ll be able to make educated decisions that will help to fuel your business’s growth.
Every business is at risk of an audit by the Internal Revenue Service (IRS.) In the event that your business is audited, you’ll have the required documents and reports to go into an audit with confidence.
At minimum, your bookkeeper should have these accounts updated and accessible for you so that you can provide them to the auditor who will conduct the financial audit of your firm.
When it comes to getting financing or garnering interest from new investors, bookkeeping is the way to inspire confidence in your suitors.
If you are seeking a loan to expand your business, banks will want to see a track record of growth and stability on your financial reports. If you’re interested in raising capital via vehicles like a SAFE or convertible note, investors may want to view your “data room,” which holds documents that include financial reports to further get to know your business prior to making an investment.
Employing a firm that also provides bookkeeping services could alleviate the pressure once you begin to seek out options for financing the growth of your business.
There is a level of peace that comes with knowing that you have done the right thing, the right way. Bookkeeping not only helps you to have peace of mind, but it buys back time for your business that you likely would have been spending on tedious administrative tasks, or catching up on recording transactions during task time.
Don’t let another year go by without making sure that your financial health is up to date, and that you have a sound time of professionals working for you. Schedule your Yarnway Wealth introductory call today to let more about our Business Essentials™ service today.
In our guide you’ll learn the financial essentials for any business, marketing hacks, and the best ways to optimize your dollars.