When you took that leap of faith to start your own business the last thing you probably thought about was bookkeeping. It definitely isn’t the glorifying part of creating something successful, but it could possibly be the difference between success and failure. This is the most important piece of running your business.

You have so many things on your plate when you are trying to make your business a success. Things like cash flow, what is your business worth, should I bring on another employee or is this business profitable. The answers to these questions can be answered by having a good set of books. Bookkeeping can be thought of as the medical records of your business. It is going to let you know if you are healthy or need to work on pieces of the business that are unhealthy.

Business owners use bookkeeping to record the transactions of the business. When you start this important practice from the first day you open your doors it gives you an incredibly powerful roadmap going forward. You are able to look back at the previous year’s books and better predict what the future holds. If you had strong sales in last year’s summer months you can plan accordingly by increasing inventory or hiring an extra hand. Also, if you have tight months during the winter you are able to plan ahead by putting back extra money during the busy months. Good books are going to help you make these important decisions. 

Another important part of running a business is having enough money to grow. If you are not able to secure enough money through the business to grow you are most likely going to turn to a bank for a loan. The first thing the bank is going to want to see is some financial statements. You are going to make these financial statements from your excellent bookkeeping. Plus, you are going to be able to add charts and other powerful information that shows your prior year’s growth along with projections. On the other hand, if you don’t have good books it might show the banker you don’t really know the health of your business. 

Most business owners start a business that is already in an established industry. When you open your used car lot you are not the first to do so, and the same is true for a public accounting firm, clothes shop and jewelry store. Having good books will allow you to benchmark your business against those in your industry. It will tell you if you are spending too much on inventory, you’re not doing enough advertising or a number of other financially related questions. This is very powerful when you are a small business and you want to tap into the knowledge of very successful companies that have paved the way in your industry.

At the end of each year all business owners have to submit a tax return to the Internal Revenue Service. This becomes a very difficult task when you have procrastinated keeping a good set of books. Figuring out your box full of receipts and turning that into a tax return will have you thinking about going back to work for someone else. When you have been keeping your books regularly throughout the year filling out the tax return becomes a welcome event because you are in control of your finances. 

Lots of business owners use a system like Quickbooks and Xero to keep track of their transactions. You can also find other software systems to help. You don’t want bookkeeping to take away from the time you need to spend growing your business. I recommend getting in touch with a Certified Public Accountant who can help you set up a system that is going to be easy to use and help you get the most out of your books. Successful locally owned businesses are the backbone of a community and we all want to see you succeed.