When you are starting or running a small business, there are many responsibilities that need your attention, whether it’s recruiting and training staff, marketing, daily operations, and more. You’re very busy, but one thing that is extremely important is to stay on top of your finances with small business bookkeeping.
What Is Bookkeeping?
Bookkeeping refers to the regular recording of financial transactions in a business. While it used to be done on physical paper in books, bookkeeping is done in programs like QuickBooks or Xero today, which allows for automated processes and general ease.
Why Is Small Business Bookkeeping Important?
- Organization- Having a good system to record your business’s expenses and income will help you keep your financial information accurate and easy to find in one place. This will make your job easier when it’s time to do your taxes because you will have the information you need along with the assurance that you won’t make mistakes and have to pay penalties.
- Planning- For any business, it’s important to plan ahead and budget so you can meet your goals and be successful. In order to plan, you need to know what your expenses are and how much money your business is making. Understanding these things can keep your business financially healthy. You’ll be able to strategize and make good decisions to increase your business’s profitability.
- Analysis- Small business bookkeeping allows your company to prepare financial statements such as a balance sheet, income statement, or statement of cash flows. These provide a simple, clear idea of your financial situation for investors and other interested parties.