Bookkeeping is a key part of any business’ accounting, but a lot of entrepreneurs find it tedious, time-consuming and downright tedious. On that note, it is often deferred and not entirely prioritised, and eventually, neglected. That should not be the case, because it just creates more problems down the line. This is why it’s important to hire accountants even for online businesses.
What is bookkeeping?
Bookkeeping is, simply put, the part of the process wherein financial transactions are recorded. Transactions include payments, purchases, receipts, and sales by an individual, a corporation, or an organisation. When your financial records are accurate and up to date, you will have a clear view of how each part of your business is performing. It is much easier to see opportunities wherein problems can be addressed alongside any inefficiencies.
Unfortunately, in an attempt to cut on costs, a lot of business owners decide that instead of hiring a bookkeeper, they will somehow try their best to just keep it in their head. This is despite the convenience of outsourcing to an ecommerce accounting firm. That doesn’t always work out for the best, and the consequences of not taking bookkeeping seriously catch up eventually.
There are many reasons not to neglect bookkeeping for your business. In fact, we’ve split this topic into two because there are countless reasons why you shouldn’t ignore this aspect. For now, here are the top three reasons bookkeeping is essential for any business.
Keeps Your Payroll Accurate
Whether you have a small number of employees or dozens, even hundreds, making sure you give people the hard-earned salary they deserve is vital. They deserve nothing less than being paid accurately and on time every single salary day. While intervals can vary per employer, a schedule must be set. Having good bookkeeping ongoing means that aside from their pay arriving on time, their benefits (leaves, retirement contributions and the like) are streamlined. This means not having to rush payments, which can cost expensive fees, or worry about failing to collect or over-collect taxes.
Enables You to Make Sound Decisions
You won’t be able to make decisions that are sound without proper bookkeeping. It’s important to have accounts that are reconciled, because otherwise, you won’t have a complete grasp on information. It will be very difficult to make smart decisions regarding the path and growth of your business. Can you really afford to hire another employee? Is it the right time to invest in an upgrade for your product or service? Without an up-to-date cash flow forecast, you might just be incurring more expenses or putting an unnecessary burden on the cash flow.
Neglecting bookkeeping immediately equates to your business losing money, no matter how well your business is doing. Not being able to understand specifically where your funds are coming from and where they’re going exactly, a portion will definitely get lost in some sort of void. It will also be much harder to keep track of any collectibles or debts owed to you unless your receivables are in order.
While there are cases wherein customers hold off paying until they absolutely must, there are a good number of people who just have no idea because an invoice was never issued to them. Not having a solid record on paper will negatively impact your income and your relationship with both customers and vendors. The worst-case scenario is that you end up allocating debts and payments to the wrong persons.
If your books are not in order, therefore making your cashflow inaccurate, it will be downright impossible to determine if your business is actually growing. Needless to say, bookkeeping is an integral aspect of your business, and entrusting your bookkeeping needs to the experts will do wonders for your company.
Need a reliable online accounting firm for your business? Contact us today! We look forward to helping you stay on track.