Why is proper bookkeeping critical to your small business? Here are four essential reasons:
- Bookkeeping Helps You Catch More Tax Deductions – Simply put: If you track and record everything, you’ll find more deductions from things you did throughout the year, e.g., business lunches you had with a client six months ago, that laptop you bought in October. It’s easy for these things to slip through the cracks if they are not properly documented.
- Bookkeeping Helps You Get a Business Loan – Banks need detailed financial records and income statements you can prove.
- Bookkeeping Catches Any Mistakes – You need to pay attention to every transaction your business has to avoid and/or correct common financial mistakes including double payments, invoices that were not collected or other things that may be easily missed.
- Bookkeeping Tells You Where Your Money Goes – This may sound obvious but keeping good track of your expenses so you can budget more effectively. You need to understand your cash flow, expenses and payments to plan for the future of your business.