Six Reasons to Up-to-Date Bookkeeping

Your accounting has to be updated regularly, much like your automobile, to keep your business running well. You must always be prepared for a breakdown if you fall behind on your bookkeeping.

Here are six things you can do with up-to-date books, whether you conduct your own bookkeeping or have Bookkeeping Pro do it for you.

You Can Keep Track of Your Costs.

Every time you incur a company expense, you must account for it. Perhaps the outlay is for office paper clips. Maybe it’s a tank of diesel for your organic farm’s tractor. It needs to be recorded in your books, no matter how big or tiny it is.

Expenses are usually documented in the general ledger. When they aren’t, it’s easy to get into problems owing to sluggish bookkeeping.

Knowing how much you’ve spent and how much you’ve made requires up-to-date bookkeeping. It is crucial information for your company’s day-to-day operations.

You Can Stick to A Company Budget.

It’s fantastic to keep track of your spending. Even better, make a strategy for every dollar you earn next year.

However, you can’t establish a budget until you have a realistic understanding of how much you spent the previous year. That’s your starting point. Then you make a plan for how you want to spend your money this year.

Most budgets fail because they aren’t updated each month with actual expenditure figures. When you conduct regular bookkeeping, you can evaluate how you’re doing about your financial plan and make modifications as needed.

Assume you wanted to reduce your Facebook advertising to merely $300 per month to start saving $150 per month for an expensive industrial screen-printer. However, you realize you need to get rid of some goods as soon as possible, so you invest $450 on your next Facebook promotion.

You can see that the printer will have to wait another month now that the books have been updated (and the budget has been adjusted). But, at the absolute least, you know where every dollar goes and how it affects your firm.

You Can Anticipate Revenue.

One of the things that feel like an intellectual activity is forecasting revenue. However, there are instances when you want an accurate prediction, and the easiest method to obtain one is to review your previous financial accounts.

If you pay estimated taxes quarterly, for example, you’ll need to predict income for the year so you can figure out how much tax to pay.

Month-to-month forecasting is also crucial. Perhaps it’s tourist season, and your hamburger stand is thriving. It’s so busy that you’ll have to employ another high school student to man the grill.

Whether you don’t know how much money you’ll have come into your business for the remainder of the summer, how will you know if you can afford to cover another wage? You’ll be able to do the arithmetic and add another spatula to your fleet if you go back through your books from the previous summers.

You Can Avoid Tax-Season Worry.

Suppose your books are up to date. You’ll be able to relax and enjoy tax season and the new year.

If you’ve kept track of all your company transactions through December 31, you’ll have everything you need to have an accountant draught your tax return for you. You may focus on popping champagne instead of preparing your taxes on New Year’s Eve.

However, if you get to the end of the year with out-of-date books, you may find yourself scrambling. It costs money and time to hire a bookkeeper or accountant to conduct catch-up bookkeeping for you or even to bunker down and do it yourself. On New Year’s Eve, you could find yourself counting pennies rather than counting down the minutes till midnight.

Even though paying for an accounting solution costs money over the year, the savings in catch-up expenditures at least partially offset the cost.

You Can Acquire a Loan (Or Find Investors)

Let’s assume your burger shop works exceptionally well during the tourist season in the summer, but you want to keep things going throughout the rainy season. A covered patio area could do the trick, enticing folks to come in and have a bite out of the rain.

To employ a builder, you’ll need money. However, the bank will want proof that your firm is profitable before extending your line of credit. (After all, they’d prefer it if you finally paid back the money you borrowed.)

“You’ll need to show up-to-date financial statements to do so.”

The income statement, balance sheet, and cash flow statement are the three most important financial statements. These three statements show how much money you’re making, how your costs influence your income, and how money moves through your company.

(You can read more about them in our basic introduction to financial statements for small company owners.) An accountant can help you keep track of your finances if you give them current books. Then, a lender can look at your financial documents to see if your company is healthy and profitable.

You May Plan for Crises

When you operate a business, it’s a good idea to plan for the unexpected. Murphy’s Law, on the other hand, occasionally has the upper hand.

A swarm of aphids decimates your kale crop, or a burger grill chooses to stop working. When dealing with a sudden increase in expenses or a drop in revenue, you need to be prepared to compensate. It may necessitate the use of backup reserves.

Can absorb Unexpected expenditures can be fascinated with the aid of an emergency fund. You might be amazed at how rapidly your savings grow just by putting aside a portion of your monthly company revenue. When your bookkeeping is out of date, though, it’s virtually hard to save for emergencies.

You can see how much money you’ve saved by looking at your current books. They’ll also tell you when you may start withholding more from your paycheck or when you need to use part of your emergency fund savings to meet more pressing expenses.

Take advantage of the advantages of up-to-date books without having to spend hours on spreadsheets or accounting software. When you delegate your accounting to Bookkeeping Pro, you can ensure that your records are always up to date and ready for tax season.

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