Small businesses sometimes run as either little firms, or partnership companies, or ownership issues. several little businesses fail as a result of they don’t have a correct tax strategy.
If you are a Small Business Owner and are not maintaining your books, when the tax time comes you are handing over a handwritten note or excel spreadsheet, or shoebox of Receipts and expenses to your Accountant, just so you can file your taxes.
A. What is Bookkeeping :
The activity of keeping records of the financial affairs of your Business.
B. Why is bookkeeping important :
- Tax Deductions – so do not miss claiming any expenses.
- Business Loan – When you apply for Financial assistance/Relief/Grants.
- Financial Mistakes – errors, omission, duplicate payment, fraudulent transaction, staff stealing money
- Financial Picture – one of the major reasons for Small Business failure
- Business and personal – happens a lot with start-up – have the credit card handy, before the business bank account is set-up.
- Helps understand your Financial position – Profitable or not
- Are you pricing your Product/Service correctly?
- Foundation for Preparing Budgets, cashflow.
C. How you can maintain the books :
Software (highly recommended) – never do it in excel – the money you are trying to save is not worth your time.
- Software helps avoid calculation errors.
- Creates your financial statement easily vs in Excel you can only see your income & Expenses
- Get help from a professional to set up Accounting software first, then you can maintain going forward.
D. When – Frequency of Review/analysis of your numbers
Based on Revenue:
- 1 Million in Annual Revenue – Monthly
- $500K – $1M – Quarterly
- $250K to $500K – mid-year, Oct, then year-end
- Under $250K in Revenue – October, December
E. Get Assistance
Hire professional – Any Business Owner doing more than $500K in Annual Revenue, should not maintain their own books.
SUM UP :
Bookkeeping is a benefit for Easier to plan , gives instant reporting, Better tax prediction. It helps to faster business response in minimal times and faster financial analysis