Is It Important for Small Businesses to Keep Accurate Books?

December 5, 2022

Every business, irrespective of its size, needs to keep accurate records for financial planning and decision-making. These records can help businesses trace back to steps taken and how to optimize their business process for better efficiency and productivity. As a small business owner, keeping track of your records can be overwhelming, especially as there’s a lot on your plate already. This is why you need Denver’s trusted bookkeeping service to shave off some stress while focusing on other important aspects of business growth.

The major reason you may not consider hiring a bookkeeper is cost. Quite frankly, most small business owners don’t consider the cost of hiring a bookkeeper on their account. However, it is a trade-off worth taking, especially as it allows you to focus more on other aspects of your business while accurately tracking your business finances.

Unconvinced as to why you require a bookkeeper or bookkeeping service? Here are some other reasons to consider.

Helps Track Business Growth

Small business owners often have higher expectations from their businesses. They want to hit milestones faster, which means putting themselves under undue pressure, especially in the face of factors they have no control over.

Hiring a bookkeeper reduces your stress, especially as you can now delegate a critical aspect of your business to a professional for help. You can go on to focus on other important parts, assured there’ll be no missed transactions.

Transaction recording accuracy also means you’ll have access to all the financial information needed to track your business’ growth from Day 1. This can help you make better decisions based on available data.

Eases Collation of Financial Statements and EOY Accounts

Leaving the bookkeeping or accounting side of your business unattended creates a bottleneck in the future, especially when creating a financial statement or End of Year (EOY) account. You’re bound to miss and omit some key transactions that may be needed to balance your business account.

The stress of racking your brain thinking of past transactions can take a toll on your current productivity, which may also affect your current financial standing. It is better to have a professional tracking all of these, ensuring that financial accounts’ preparation at the end of specific periods is fast and seamless.

Separates Your Income, Income Sources, and Expenses

One of the greatest problems faced by small business owners is income separation. Small business owners may often find it hard to separate their personal money from the business’ money. This can be a huge issue in accounting terms.

Having a bookkeeper gives you a better perspective on what your business is doing and how your separate income sources come in. You also get a clearer view of your expenses and where the money was sourced from – whether from an external injection from your savings or other income or from the business’ pocket.

Track Deductible Expenses Easily

Hiring a bookkeeper can save you a lot of money, especially with regard to taxes and tax preparation. Small business owners are able to keep track of their income and expenses. The expenses aspect may also contribute to their taxes as certain items become deductible and reduce the expected tax to be reported to the IRS.

Business owners can save thousands of dollars annually in taxes simply by correctly tracking their deductibles and reporting them accordingly.

Bookkeeping Eases Tax Return Preparation

Everybody dreads an IRS tax audit. This means you must make sure that your tax reporting is as detailed and accurate as possible. With a bookkeeping service on your payroll, you can better track your business’ income and expenditure. You can also better track deductible spending, giving you all the information needed to prepare your annual tax documents.

With a bookkeeper employed, you can save time and energy on tax filings annually while being confident that you’ve provided the IRS with accurate tax information for your business’s financial year.

Arms You With Evidence During Tax Audits

While the IRS tax audits are dreaded, they do happen. However, having accurate financial records gives you a better edge and arms you with the evidence needed to clear your name.

Your bookkeeper will effectively track your business’s financial health and growth, detail income and expenditure, and mark out tax-deductible spending, all of which are valid and essential information for tax authorities during a tax audit.

Better Management of Payments, Payroll, and Profit Distribution  

A detailed record of your business’s financial health gives you a true picture of how far you’ve grown over a period, whether quarterly, mid-year or annually. This also gives better insight into your payments and payroll and how to make your employees happier for better productivity. You also get a better overview of profit and how to distribute your profit effectively for continued business growth.

As stated earlier, the benefits far outweigh the cost-implication. Set your business on a leveled financial plane by hiring a bookkeeping professional.

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