A dialed bookkeeping system can really be beneficial to a business. Having an updated and accurate bookkeeping system can help you make crucial business decisions. While I feel there are many benefits to having a bookkeeping system that works, I wanted to give you what I feel are the five biggest benefits of an updated and accurate bookkeeping system.
1. Minimizing Your Tax Liability
Taxes are a big deal to many people and business owners. Some people are very intimidated by their taxes and rely on their CPA to make sure their taxes are handled correctly. One thing I think that many people have in common when it comes to taxes is everyone wants to pay as little in taxes as possible. However, I think too many businesses approach tax season with the wrong mindset. Many business owners wait until after year-end to start thinking about taxes. The problem is waiting until after the calendar turns is not as beneficial as doing a tax evaluation prior to the end of the year. You should be reviewing your business financials with your CPA each year prior to year-end to make sure you are minimizing your tax liability. You may be able to make some last minute moves that will benefit both your business and your tax situation. A dialed in bookkeeping system will make a tax review prior to year-end possible. Knowing that you are reviewing accurate books prior to the end of the year is absolutely critical. Accurate and up to date bookkeeping will keep you from having to scramble to get everything together last minute. Instead you can spend that time reviewing your tax situation with your CPA and making some decisions.
2. The Ability To Make Crucial Business Decisions With Real Time Data
A bookkeeping system that is up to date allows you to use your financial data to aid you in making key business decisions. If your bookkeeping system is not updated regularly then you are essentially running your business blind. It is one thing to have a gut feeling that you are spending too much in a certain expenditure category. Having updated books brings the truth to the surface and problematic areas will be staring you in the face. Accurate financials will also allow you to see how you are stacking up to your budget and forecasts. A dialed bookkeeping system will keep you on track and help make those tough business decisions a little easier.
3. A System With Checks And Balances
A dialed in bookkeeping system should have checks and balances that can help take a lot of worries and questions out of a business owners mind. One common question I get from business owners is this: is my bookkeeper stealing from me? With a bookkeeping system that works this will never be a question. In fact you can be sure that employee theft is a non-issue by inserting checks and balances into your bookkeeping system. As an example your bookkeeper should handle some aspects of accounts payable, but not all of them. Your bookkeeper should handle bills but should never have the ability to sign checks or send bill payments. Having the right checks and balances in your bookkeeping system will allow you to stop worrying and focus on more important things like increasing sales and running your business efficiently.
4. Having A Handle On Cash Flow
Cash flow is such a crucial part of a successful business. Without cash a business will eventually go out of business. Getting a handle on cash flow will keep your vendors and employees happy, which will keep your business on the path to success. Cash flow is driven by handling your accounts receivable correctly. Poor accounts receivable procedures will lead to cash flow problems. Using good accounts receivable procedures right from the beginning of being in business will help keep your cash flow at an optimal level. Cash flow is driven by both your ability to sell, but also your ability to collect on your sales.
5. Increased Profits
Is anyone reading this that does not want to increase their bottom line? There are not many business owners out there that are not trying to increase profits. So how can your bookkeeping system allow you to increase your profits? An up to date bookkeeping system will allow you to not worry about where you are currently at financially...you will see it right in front of you. So you won't spend time wondering about your financial situation, instead you will be reacting to real time data to improve your financial situation at all times. You can use your financial reports to increase sales or cut expenses, thus driving profits higher.
These are just a few highlights of the many benefits of a dialed in bookkeeping system.
How does your bookkeeping system benefit you and your business?
Wish your bookkeeping system could do more?