Bookkeeping is the recording of the day-to-day financial transactions of a business, such as purchases, sales, receipts, and payments. Each transaction is documented so that reliable financial statements may be created using the data collected. Accuracy is therefore the most vital part of the bookkeeping process. Starting and maintaining solid, professional bookkeeping practices is essential for the operation and growth of a business and ensures informed decisions are made and reduces the risk of mismanaging funds.
Bookkeeping provides key insights into the overall health of a business. Understanding your business’s financial health eases making future plans involving hiring, expansion, and day-to-day operations. Financial statements, such as your balance sheet or income statement, give you the information you need to make decisions from an informed perspective rather than a taking a gamble.
Bookkeeping makes tax filing less complicated. When tax season rolls around and you must provide your accountant with the necessary documents for filing business taxes, having clean books substantially cuts down on the time it takes to prepare tax documents. Rather than rummaging through your business receipts, the accountant can focus on finding possible tax deductions, saving their time and your money.
Bookkeeping lessens the pain of an audit. Businesses always run the risk of one day being audited. While it’s not something to look forward to, it’s definitely worth preparing for. Having all your bookkeeping organized and in one place will make it easier to retrieve your business’s financial information and can help avoid penalties or late fees.
Bookkeeping is a tedious, complicated, and often dreaded task. There are quite a few bad bookkeeping habits that are easy to fall into when trying to manage your business’s books if you’re not a trained bookkeeper. Without proper training, it’s challenging to navigate which accounting methods to use, how to manage cash flow, or even understand the key accounting metrics that can set your business up for success. Bookkeeping and accounting are challenging skill sets to learn, and it’s important that your business’s books and accounting are done right so you can make smart decisions and grow healthfully.
Say goodbye to the headaches of balancing books and ledgers. Count on Sibley & Associates to make sure your credits equal your debits.