Bookkeeping is Crucial to Your Business Success

Xero Training Australia WideKeeping track of sales, margins, expenses, and purchases is fundamental to the overall financial health and sustainability of your business. Effective bookkeeping produces the data you need to evaluate your current practices, anticipate challenges, and set attainable future goals.

But despite their proven importance, many business owners dread and avoid accounting tasks. In fact, 40% of surveyed entrepreneurs claim that bookkeeping is one the worst parts of running a business!

“These stats blow our mind. I mean if your bookkeeping is up to date and accurate, you can pretty much predict the future (no crystal ball required).”

You can predict your cash flow, you can predict when you will have a down turn, you can predict when you might need extra staff.  Who wouldn’t want to know those things in advance?

Here are four reminders of how effective bookkeeping is pivotal for small business success.

1. Keeping track of reimbursable expenses

A reliable system for tracking reimbursable expenses ensures you reap all the benefits you’re entitled to when it comes time to do your tax return. So all those items paid for via cash, or on personal bank accounts or personal credit cards – that are business related, they need to be tracked.

Also., you need to track any costs your employees incur on the business’ behalf.  Do you need to pay them back for things and if so you want to do that in a timely manner.  Nobody wants to be known as the tight arse boss who doesn’t pay their staff back.

2. Measuring profitability and planning for the future

In order to grow your business, you must be able to constantly track and compare your finances from one year to the next.  This is such a powerful tool – and most people don’t even do it.

In addition to reconciling the books and bank statements every month, amazing bookkeeping generates information you can use to gain a comprehensive overview of your business. This data can help you:

  • measure year over year profits;
  • identify opportunities to cut costs;
  • plan for major expenses (such as new office space, equipment, or staff); and
  • develop data-based strategies for expansion.

This is the “crystal ball future prediction” stuff I was talking about earlier.  Sometimes, knowing you are so close to smashing last years goal is enough to push through hard times and come out on top.

3. Preparing for tax season

Nobody wants a shoebox overflowing with receipts and paperwork at tax time. Nobody.

Nor do you want to sit down at 30th June and highlight items from pages and pages of bank statements as you haven’t recorded your business expenses accurately during the year.

And don’t get me started on entering all your yearly information manually into excel only to find that the formulas used to add up columns don’t work, nor do they take into account GST or anything else.

Make it easy on yourself and investigate accounting software options.  Often, these programs can also help in the paper headaches, or alternatively there are great apps on the marketplace that do just that.

Take a sneaky look at  both Hubdoc and Receiptbank – we offer discounted subscriptions for both and believe you me, not having to deal with paper will instantly give you a lift plus it makes sharing documents with your tax agent so much easier as they can see the pdf directly in your accounting software.

See ya later shoebox!

“Asking for help with your bookkeeping needs is not a negative thing, it is investing in the financial future of your business.”

Most entrepreneurs, solopreneurs, mumpreneurs, side husterls are passionate about developing new business ideas, not crunching numbers. Employing a professional bookkeeper, even on an as-needed basis, can help optimise your accounting and increase overall profitability.

There’s a good reason 71% of small businesses outsource at least one accounting function to help manage tasks like payroll, closing the books each month, and managing accounts receivable.

It’s well worth it. Spend time on your core business activities and let the professionals take care of the bookkeeping. By investing in effective and qualified bookkeeping you are building a solid foundation for a resilient, forward-moving small business.