Launching and growing a business requires you to excel in many different areas. You must consider sales, marketing, product development, customer service, recruitment, training, and much more.
However, many entrepreneurs neglect bookkeeping as they juggle all the other responsibilities of running their new companies. And that can cause a range of problems that significantly hinder a company’s chance of success. After all, how are you going to keep things running smoothly and accomplish your goals without sound financial management in place?
If you’re planning to start a business or are looking for ways to grow your existing one, reevaluating your bookkeeping practices is a great place to start. Cedar Valley Sentinel has listed 12 reasons to prioritize bookkeeping in your business. As your look at these reasons, if you need help with any of them, check out the Cedar Valley Business Directory and see if you can find local help if needed.
1. Keeping Information Organized
Every entrepreneur should be organized and able to find company-related information at any time. Lenders, employees, stakeholders, and the IRS will be interested in your organization’s financial records, and you must be able to quickly provide them to remain in good standing and operate smoothly.
Having access to crucial financial information will help you make intelligent decisions, avoid penalties and fees from the IRS, and keep a healthy cash flow from lenders and investors. You can help your finances stay organized with accounting software. Look for a cloud-based solution that simplifies bookkeeping, allows you to send branded electronic invoices, and lets you store receipts to use for your tax records.
2. Maintaining a Budget
Reviewing your business’s financial expenses and resources is much easier when you have an up-to-date budget in place. Your budget essentially serves as a financial roadmap for your company, and it helps you outline future expenses and the expected revenue that can cover the expenses. Bookkeeping allows you to create an accurate, detailed budget to stay on solid ground.
3. Managing Your Finances
Keeping sound financial records gives you more control of your company’s finances. Accurate bookkeeping provides an objective view of how your organization spends money. It helps you to receive payments from your customers and pay your bills on time, ultimately helping you maintain cash flow so that you can keep pursuing your goals.
4. Preparing Your Taxes
Your organization is likely required to file an annual tax return. Besides, you must file a personal return, requiring you to file a business return. Don’t be like so many other entrepreneurs tearing through their offices to find the paperwork they need. Maintaining your books will make the tax-filing process much more efficient. A great Eagle Mountain resource for taxes is Dow Tax Services.
5. Enhancing Your Cash Flow
Bookkeeping makes information related to outstanding invoices accessible to your team. This includes dates issued, due dates, balances, and customer names. You can use all of this information to execute effective cash flow policies.
For example, perhaps you need to require your customers to pay you more quickly or wait until a couple of days before the due dates to pay vendors. This maximizes the amount of cash accessible to your business at all times, equipping you to stay current on your debt and invest in growth initiatives.
6. Managing Invoices
Invoices are records of services rendered by your business, and maintaining them is a critical function of keeping your company’s books. Though invoices can be used in a variety of ways, they will consistently contain some key information — contacts, itemized products and services, payment terms, and identifying information. Ensuring that invoices are distributed and paid in a timely manner is vital for your business’s success.
7. Analyzing Performance
Managers often use bookkeeping to analyze their company’s performance. It’s crucial to frequently generate and analyze financial statements to track the inflows and outflows of cash for your business.
Then, you can see the business activities that are and are not working. In other words, analyzing financial statements reveals your organization’s strengths and weaknesses so you can act accordingly.
8. Planning for the Future
Understanding the past enables your business to plan for the future. Accurate bookkeeping shows your team how the organization has performed in the past so that you can develop effective tax planning and growth strategies for the months and years ahead.
As a business owner, you understand the importance of tactical and strategic planning. Growth and development are at the core of your mission, though your definition of growth might be slightly different from others.
Bookkeeping keeps you on track to your short and long-term goals. You can use your company‘s financial information to strategize, monitor outcomes, and adjust your goals and steps accordingly.
9. Making Better Decisions
You likely make company-related decisions every day, and you can’t make educated decisions without having access to essential information. Bookkeeping ensures you’re getting the information necessary to perform analyses and make profitable decisions at each step.
10. Tracking Profit and Growth
The surest way to gauge your company’s profitability is to keep accurate books. For instance, you can easily determine your business’s profitability by evaluating your income statement. Without this information, there’s no way to assess whether or not your business is making enough money.
You can also use bookkeeping to track growth. Your business generates a wealth of data over time, allowing you to observe trends, better understand your business cycles, and compare outcomes across different periods.
11. Reporting to Investors
No investor wants to work with a business with unclear financial performance. To ensure they are making sound decisions, investors expect to quantify their investment’s value, which requires financial statements.
An investor can easily determine your company’s value by reviewing the balance sheet, income statement, and cash flow statement. Providing access to current information will keep you in good standing with your investors.
Further, accurate bookkeeping can help you build relationships with future investors, as they are much more likely to invest in a business that keeps its financial records organized and accessible.
12. Peace of Mind
Having a bunch of physical clutter in the workspace can add unnecessary stress to your life. The same goes for your business’s finances. Disorganized books can add stress and weigh heavy on your mind.
You encounter plenty of challenges as it is, and bookkeeping should not be stealing your peace of mind. Prioritize accurate bookkeeping, and you can rest easy knowing you can quickly provide banks, investors, or the IRS with the financial information they need.
If you want your company to run smoothly, develop effective strategies, and achieve healthy growth, you must prioritize bookkeeping. You have a lot on your plate as a business owner, so don’t let poor invoicing and bookkeeping be the thing that brings you down. Start researching top-notch accounting software and reputable financial professionals who can help your business thrive!
Additional Help
Eagle Mountain Chamber of Commerce
Eagle Mountian business owners have additional help provided by other Eagle Mountain Residents. One of those resources is the Eagle Mountain Chamber of Commerce. The chamber’s mission is to help Eagle Mountain Businesses. “MISSION: Through the commitment and involvement of its members, the Eagle Mountain Chamber of Commerce provides business leadership for the Eagle Mountain community by Promoting G.E.A.R.S”
- G– Growth Opportunity
- E– Education
- A– Advocacy
- R– Resource & Connection
- S – Serving our community
The Chamber will help your business network as well as other ways to help your business grow.
Government Websites
Local city websites are also a good place to find information to help you with your business and information on how to make your business grow.
- Utah. gov – Doing Business in Utah
- Eagle Mountain – Why Eagle Mountain?
- Saratoga Springs – Doing Business in Saratoga Springs
Mike Kieffer is an IT geek by hobby and trade, with a BS in Information Systems & Technology. He is a proud father of 10, a grandpa, an author, a journalist, and internet publisher. His motto is to “Elevate, Inspire and Inform”, and he is politically conservative and a Christian. Mike has a passion for technology, writing, and helping others. With a wealth of experience, he is committed to sharing his knowledge with others to help them reach their full potential. He is known for his jackassery or his form of self-expression that encourages boldness, creativity, and risk-taking. It can be a way to push the boundaries and challenge traditional norms, leading to creative solutions and positive change.