Bookkeeping is very crucial, but it seems to be the last concern in the pecking order until things go wrong. Several business owners tend to ignore the red flags of business management such as proper financial practices but in due time these issues tend to snowball into even bigger ones.
Regardless of how big or small your organization might be, bookkeeping is a must-have for the organization for efficiency in understanding its finances.
If you are also in doubt if you need to incorporate a bookkeeping service or upgrade your bookkeeping system, these are some clear signs your business needs a bookkeeping professional, now!
1. You Struggle to Track Cash Flow
Small establishments, in particular, struggle with cash flow issues regularly. Without competent accounting practices, cash inflows and outflows of the business cannot be easily comprehended.
Do you find yourself asking:
- How come I am selling some things, but I never see any money being deposited in my checking account?
- Where has my income gone?
- Can I afford the bills and expenses for the next month?
If these questions ring a bell, then it’s high time your business cash flow management techniques were revised. It’s the job of the bookkeepers to ensure that adequate records of every single transaction are created and filed. With accurate and complete records, businesses will be able to notice the patterns, identify cash flow problems in the early stages, and make sound and effective business decisions.
Also, enviable bookkeeping can enable you to prepare for expected future cash flow needs at times when demand is low. As an illustration, if a business is in a seasonal downturn and has sufficient history, it can strategize and take the downturn without much trouble.
2. Tax Time Feels Overwhelming
Tax time is always the bottommost time in the business for those who have no organized bookkeeping. If you are looking for your receipts invoices, or other financial statements, you are in good company. Oftentimes, this stuff is unorganized which leads to the:
- Failure to file your taxes on time would result in free-standing penalties/interest being incurred.
- Confusion about tax matters and filing mistakes which will lead to audits or fines.
- Leaving deductions and credits unclaimed and losing all that money.
The only problem with the tax return is professional bookkeeping. The chances of preparatory chaos over taxes since they maintain financial records all year are nil. They can also coordinate with your accountants to get relevant reports and documents that would ease the bungling around during filing.
Apart from just compliance issues, a good bookkeeper can also put techniques in place to help you save on tax. For example, it would be a good idea to record deductible expenses like a home office, mileage, or purchasing of equipment that will lower your taxes effectively.
3. Inconsistent or Missed Payments
Yet another area that affects your business not just internally, but externally as well, is the management of relationships with vendors, clients, and employees. Many people walk into scenarios where they:
- Forget obligations like paying suppliers, creating imbalances in business relationships.
- Are not able to pay their employees and thereby lose the employees’ faith and trust.
- Do not consider the dispatch of invoices prompting customers leading to delayed invoices which kills cash flow.
… therefore, it is fair to assume that receiving payments in full and on time is quintessential to any business.
Balanced managing and accounting practices allow a business to maintain all of its financial commitments. A competent and qualified bookkeeper should be able to implement measures for payment scheduling, periodic payment reminders, and debt collection. This makes sure that the firm’s operations are efficient, its stakeholders are satisfied, and no late charges or fines are incurred.
Additionally, with the invoicing of clients for work undertaken, department specialists ensure that practices that engender loss of revenue do not occur. It will enable institutions to account for all debts owed to them and ensure that all of those debts are completely recovered at the right time.
4. You’re Spending Too Much Time on Finances
In running a business, your time is perhaps your biggest resource. However, if you find that you are dedicating hours to balancing your proper bank accounts, writing invoices, and keeping track of your company’s expenses, then it means you are putting aside more important areas of your business growth, development, and customer satisfaction.
Let’s admit it, if you lack the right know-how or the right tools for bookkeeping, this can be an enormous waste of time. And even worse, errors may occur that need to be rectified which will take even more time.
However, you can gain practical peace of mind by shifting non-core functions such as bookkeeping to an expert or even improving on modern bookkeeping systems:
- Rid yourself of hours upon hours of work every month.
- Minimize the probability of committing errors.
- Make sure that you focus on activities meant to scale your business instead of worrying about the financial aspects.
Look at it this way: time spent on bookkeeping purposes should instead be employed in acquiring more clients, enhancing your offerings, or even coming up with blueprints for the next stage of development. This time can be recovered through delegation or the automation of bookkeeping activities.
5. Difficulty Making Financial Decisions
Business managers routinely face these questions in the course of running their ventures:
- Is it necessary to recruit employees?
- Is now a good opportunity to enter a different area?
- Should I upgrade my equipment and technology?
When making such chief decisions, one has to have up-to-date knowledge about their finances, otherwise they are in the dark.
This data is essential when undertaking bookkeeping.
They have the finesse and skill to provide target supplementation when and where it is crucial.
Regular checking on performance through profit and loss accounts, balance sheets, and cash flow statements provides a picture of the performance of your business. This enables you to:
- Reduce wastage of resources that could have purchased inputs in the wrong areas.
- Concentrate on goods or services that tend to earn the most returns.
- Take necessary steps towards actualizing anticipated levels of growth.
A good example is when one has to get a loan. The bookkeeper can assist in the documentation that is required in getting this approval. They can also assess the conditions of the loan against the finances of that particular individual.
Why Bookkeeping Is Non-Negotiable for Business Success
Without engaging, for instance, in any Bookkeeping or having a proper reliable accountant, one is bound to suffer both operational challenges, foregone opportunities, and quite often legal and financial repercussions as well. Some of the most important benefits of solid bookkeeping include the following:
- Consistency in finances: Don’t be blindsided; always know what finances to expect and when by maintaining records of your income and expenditures.
- Be audit-ready: Keep proper books of accounts and avoid being fined for contravening tax standards.
- Profitability Discovery: Find out what areas of your company are making revenues –or losses- and why.
- Lower Stress levels: Financial mess is discarded and you can concentrate on your area of strength or talent.
Getting Started with Bookkeeping
Well, if you are most definitely in need of these services then let’s continue. Here are your choices:
- A Bookkeeper: A bookkeeper can either be employed on a full-time basis or employed on or hired to offer deep regard for client needs.
- Software: Software such as QuickBooks, FreshBooks, or Wave can be utilized for elaborative invoicing, tracking of expenses, and reporting of financial statements.
- Outsource the work: Due to limited funds, this is the ideal choice for a great number of small businesses since it presents them with a chance to benefit from expertise without having to employ someone permanently.
Let EasyFiling Simplify Your Bookkeeping Needs
All businesses are on the lookout for Expert Growth Operators who are experts in the perfect management of cash flow and accounts which perfectly describes EasyFiling. If managing work-life balance during festive seasons and reporting all potential income sources sounds hectic, you are not the only one who thinks that way.
EasyFiling enhances your business aspirations by managing your financial records with professionalism as your accounts remain relevant, tidy, and dependably current. Our range in terms of services involves disbursing all accounts payable and any receivable ones as well, all to make sure your goals on expansion remain clear.
EasyFiling will not act as a mere accountancy provider but rather as a partner to ensure your business is a success. Book a free consultation today.
Nabin Adhikari
