If you still use Excel (or no system at all) to keep track of your business income and expenses, you may be wondering if you are ready for bookkeeping software. For calendar year businesses, January is the best time to set up and start using a new system. Here are a few valid reasons why a good bookkeeping system is important in running a business:
Would you say compliance with IRS requirements for recordkeeping is a good reason to keep a proper set of books? I definitely would. You may choose any system that suits your business needs (in most cases) as long as it clearly presents the picture of your income and expenses.
Cash Flow Management
Do you ever feel that your sales are booming, but you barely make ends meet? Being in control of your cash situation requires more than just knowing how much is in the bank. A good bookkeeping system helps you stay up-to-date on your money matters: know exactly how much you have in the bank vs on the books and be aware of what is scheduled to come in and go out. When cash is tight, you can still feel in control because you are on top of collecting your outstanding invoices, and your system helps you stick with a budget.
A well-kept set of books means you are not in the dark about your finances. When your information is up-to-date, you are able make informed business decisions. When the time comes to do tax planning, you are prepared to answer your accountant’s questions, you know exactly how much you can afford to spend to maximize your deductions, and are able to get good advice.
Saving on Professional Fees
Having your financial data neatly organized definitely pays off at the end of the year when you hand off the books to your accountant. The less work we have to do to clean up the mess, the more value we can provide to you at a lower cost.
With a good bookkeeping system and timely reconciliations, you will be ready to file your taxes, stress-free. Running a business is stressful enough. There shouldn’t be any frustration at the end of the year when it comes to gathering your data for tax return preparation.
In addition to the above-listed examples, your bookkeeping system will help you avoid wasting money on unnecessary expenses, keep up with bill payments and avoid late fees, stay penalty-free with government agencies, acquire financing at a bank, and more. A good bookkeeping system works for you all year long and offers a great return on investment.
What system you will choose depends on the type of business you operate and your personal preferences. If you need help or guidance, schedule a free consultation with our accounting expert. To learn more about our bookkeeping services, please visit our Bookkeeping & Payroll page.