Does Your Business Need Bookkeeping?

It is no secret to any business owner that keeping accurate financial records is a key aspect of operating a company. Recordkeeping can often go overlooked among all the work that comes along with owning a business.  Having a professional bookkeeping system can positively impact your business by:

• Preventing lawsuits & audits
• Allowing you to secure a loan or line of credit
• Reducing your insurance premiums

In addition to protecting yourself and your business, a strong bookkeeping system allows you to see an accurate financial snapshot of your company, which is necessary to make sound business decisions.

Defining Bookkeeping

Bookkeeping is the process of recording incoming and outgoing cash flow, as well as tracking assets and liabilities. This system involves recording transactions related to the operation of your business and categorizing them according to their use. Proper bookkeeping allows for business management to make important financial decisions.

Benefits of Bookkeeping

• Access to vital financial information
  • Using financial statements, you can confidently make important business decisions backed by data.
• Provide financial proof to the entities that may require it:
  • The IRS
    • Maybe one of the more obvious benefits of bookkeeping is the ease of filing taxes. No more digging through shoeboxes of year-old receipts every tax season!
  • Creditors
    • Make the loan application process smooth and easy using accurate financials.
  • Insurers
    • Insurance companies may audit your business to calculate risk level and adjust your premium. They will often ask for items like wage and tax documents. A proper bookkeeping system should make retrieving documents like these simple and fast.
  • Investors/Potential Buyers
    • If you decide to seek investment or someone to purchase your business outright, you will need accurate and up to date financial documents to properly value your business.
• Track Your Accounts Receivable and Accounts Payable (A/R and A/P)
  • The most profitable benefit of a strong bookkeeping system is the ability to track your accounts receivables and payables. This will help you easily identify outstanding payments you are owed, who you owe money
  • Software like QuickBooks Online allows you to create invoices, receive payment directly on those invoices, and import the data directly into your books.

Hiring a Bookkeeper or Agency

When choosing a bookkeeper, it is important to weigh your options and make the right decision for your business:

Type	Cost	Pros	Cons
Inhouse	Expensive; requires additional costs like payroll taxes.	Dedicated to your business. High familiarity with business or industry.	Can be hard to find a good fit depending on the amount of work offered.
Agency or Firm	Costs vary; contract-basis	Highly experienced with accounting principles. Usually offers additional services like payroll and tax	Likely working with multiple clients.