Bookkeeping tracks the performance of an organization. Without this tracking, companies are left stranded at sea in the night with no lighthouses to guide them. Detailed financial records allow businesses to see what’s working and what isn’t so they can decide how to move forward.
One of the most important reasons for studying history is to avoid repeating past mistakes. This is the same for bookkeeping. The ability to look over and analyze the performance of the past in relation to changes made within the business empowers businesses to avoid failure and pursue paths that lead to success. Bookkeeping, essentially, enables businesses to learn from their past.
You better hope you never need any financing if you aren’t keeping your books up to date. Loan options become extremely scarce for businesses that don’t perform diligent bookkeeping because banks and loan officers can’t get a good look at your organization’s current financial health or past performance. Who would want to invest in a company that doesn’t even understand its own financial position?
The only loan options left to you would be ones with absurd interest rates or the kinds that come along with a grisly-looking mobster wielding a baseball bat. Out of date books will make finding partners or investors nearly impossible and you can forget about selling the business off for a fair price if you can’t prove its value.
Businesses can take advantage of a whole slew of tax write-offs and deductions, but only if they keep up on their bookkeeping duties. Chucking your receipts into a box is a quick fix that is likely to end up costing the company far more time and money in the long run than tracking expenses properly the first time. Even if you do manage to hang onto every receipt by the end of the year and painstakingly account for each one, your organization is missing out on the chance to analyze its own spending.
Bookkeeping helps provide insight into operations like expense practices. Digitizing these records and analyzing expenditures can help your company find areas of waste and opportunities for savings. The IRS isn’t known for its understanding nature. Filing taxes becomes a huge undertaking when you have to manually hunt down every receipt. Digitization makes tax season a much less frightening and stressful time thanks to all the detailed records that are made readily accessible to you.
Accounts payable and accounts receivable are two of the most important reports for companies to keep in check. Missing payments can result in late fees or even termination of contracts. Furthermore, failing to track the work you’ve completed which has yet to be paid for can result in your company working for free. You’ll have a hard time sending out invoices and payment reminders if you have no idea what work was done or when it was successfully completed.
Contractors that don’t get paid are not likely to ever work for your organization again. Bookkeeping keeps track of all your operations and makes sure each player is appropriately rewarded for their hard work.
Without diligent bookkeeping, organizations will find it difficult, if not impossible, to make informed business decisions regarding the future of the organization. Bookkeeping also ensures companies have the money they need on hand to maintain day-to-day operations and keep their employees, contractors, and vendors paid the money they’re owed.
The importance of accurate and detailed records is difficult to overstate. The only problem is many business owners don’t have the knowledge or time needed to keep their books up to date. Bookkeeping may not be everyone’s favorite task, but there are tools and services out there that can help ease the burden or even take the whole load off altogether for organizations that need help with their charts and ledgers.
While bookkeeping may not be for everyone, accounting is a passion for us at Lucey Accounting. We have made it our personal goal to help every small business get the information and help they need to find financial success. In pursuit of this goal, we provide all kinds of accounting services to help businesses get on top of their finances once and for all.
Get in touch with us today with any questions you might have. We are always ready to get started on bringing your books up to date so your business can make the most of its finances.