10 Reasons Why You Need Regular Bookkeeping

I get it! Not everyone desires to be a freak in the sheets like me...spreadsheets that is! I know it is a popular opinion that bookkeeping is the least sexy thing about running a business. I am not going to try to convince you to love bookkeeping like I do. I am hoping by the end of this blog you can at least agree with me that it is incredibly important for your business to do the bookkeeping regularly. Here are 10 reasons why you NEED to do your bookkeeping regularly.

1. Accurate Financial Picture

Regular bookkeeping is crucial if you want to have an accurate understanding of your financial situation. It will show you exactly how much you are spending on certain types of expenses, how much cash you have in your bank account, how profitable your business is, and so much more. If you aren't regularly informed about the state of your finances you will never truly know the health of your business.

2. Informed Decision Making

Imagine trying to solve a crossword puzzle without the instruction key. That is how it feels trying to make decisions about your business without accurate financial records. Once you can actually see how the numbers stack up you can see what you might need to do to make your business more successful. You will be able to find areas where you might want to cut costs, find ways to increase revenue, and overall get a bigger profit.

3. Cash Flow Management

One of the biggest reasons business fail is because they have poorly managed cash flows. If you are tracking where your money is coming from and where it is going every month then you can get an understanding of what your physical cash balance can look like. Regular bookkeeping can give you a pretty good idea of what payments are due, what invoices you will be collecting on, and how much money you can pay yourself as a business owner. This can take some practice but regular bookkeeping is the first step to setting yourself up for success.

4. Tax Preparation

For a lot of business owners the only time they even worry about bookkeeping is when they are ready to file their taxes. Having your bookkeeping done regularly throughout the year is a much better way to ensure you aren't surprised by any huge tax bills at the end of the year. Most businesses are required to make estimated tax payments quarterly so it is really helpful to make sure that your bookkeeping is current and accurate. 

4. Budgeting & Forecasting

Budgeting and forecasting is a great tool to utilize historic information to make predictions and set goals about what the future might hold for you. Bookkeeping is usually one of the first steps in creating a budget because it helps show you trends from previous periods. You can take this information to create your budget for the future and to set goals for your business. Forecasting is also an awesome tool for estimating results of certain financial decisions you might make. 

5. Identify Errors

You might be surprised how often I have found errors while doing my clients' bookkeeping. I have found errors on the bank statement and errors in the accounting software. If you aren't looking at this regularly you most likely won't be able to spot errors in a timely way and that makes it harder to correct the errors. Clients can actually end up saving thousands of dollars just by catching the errors quickly.

6. Regulatory Compliance

 Depending on the type of business you have there can be certain regulatory requirements and deadlines. You don't want to be blindsided by a deadline that you forgot about and scrambling at the last minute to get your books caught up. This can have catastrophic outcomes depending on the business. 

8. Improved Financial Analysis

Financial analysis is a great way to learn how certain parts of your business interact with each other and to follow trends over time. There are so many KPI's you can look at in your business that give you insight to the health of your business and overall profitability of certain decisions. These calculations are only helpful if you have accurate bookkeeping though. 

 9.Easier Access to Credit

Most businesses have to access credit at some point or another. In most situations, lenders require that you provide financial statements so that they can make a decision on whether or not to lend you the money. Regular bookkeeping can help this situation in several ways. One reason being that you can have financial statements ready right away to hand over and you don't have to wait as long if you need the cash sooner than later. Another reason why regular bookkeeping is helpful in getting access to credit is that if you are looking at your numbers regularly you can spot red flags before they become to pervasive. You can make changes in your business that make it healthier and easier to lend money to.

 10. Peace of Mind

The last reason but certainly not the least is peace of mind. Running a business is stressful enough on its own. You don't want the reason you are up at night to be because you are behind on your bookkeeping. Knowing your numbers and being empowered to make decisions will give you the peace of mind you need to keep your business running smoothly!

Hopefully by this point you can agree with me that there are at least 10 reasons to do your bookkeeping regularly. If you still don't want to take the time to sit down and do it yourself each month I would love to help.