The Importance of Bookkeeping
No business can survive without financial structure and yet many businesses fail to invest in one of the most significant aspects of financial organization: bookkeeping. Maintaining accurate and timely financial records is essential with statistics showing that a failure to do so is one of the most common reasons why businesses fail.
What is Bookkeeping?
In the simplest of terms, bookkeeping is the practice of recording, organizing, and reporting the financial transactions of your business. It's a vital part of the overall accounting process, with bookkeeping records helping business owners and finance teams to identify areas of improvement for a company, as well as gain an overall understanding of its financial situation.
Why Is Bookkeeping So Important?
As mentioned, a lack of, or shoddily executed, bookkeeping can lead to a business' downfall. Here are some additional ways in which bookkeeping can make a difference in your business:
It Helps Make Your Business Better
By keeping timely and accurate records you can analyze them and extrapolate valuable insight from the financial statements you compile. Bookkeeping allows you to track cash flow, identify ways to save money and find areas where you might be overspending.
It's Essential for Tax Purposes
Filing tax returns is more time consuming without an effective bookkeeping system as you could find yourself desperately searching for receipts and paperwork. Furthermore, tax returns could be inaccurate if bookkeeping records are subpar, which could cost a business in loss of ITCs, eligible business deductions, or fines and penalties for inaccurate or late remittances.
It Helps You Stick to Your Budget
It’s simple logic: If you have your income and expenses recorded regularly it is easy to keep track of where your money is going and if it is falling in line with your budget. This is vital to any aspiring business as creating and sticking to a budget will prevent you from overspending.
It is a Vital Organizational Tool
If you want to be successful, regardless of your industry, organization is key. If the CRA, investors, managers, employees or year-end tax accountants need financial records, your company will appear far more professional if you can quickly and easily find those records.
It Helps Plan for the Future
It becomes easier to make reliable predictions for the weeks, months, and years ahead with professional bookkeeping. Financial projections help businesses make important decisions for sustainability and growth.
If you want your business to thrive in any economy, investing in a professional bookkeeping system is key. We offer system set up, bookkeeping training, and for those who want it all done for them, full cycle bookkeeping! Contact us to get started!