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The importance of bookkeeping for your business

The importance of bookkeeping for your business

Bookkeeping is vital to the success of any business–big or small.

It helps businesses effectively manage available resources, plan for the future, and stay well informed about the financial health of their company.

Before we list the several other benefits of bookkeeping, let’s spend some time going over what exactly this accounting process entails.

What is bookkeeping?

Bookkeeping is the process of recording all financial transactions made by a company, including purchases, sales, receipts, and payments.

When done properly, bookkeeping can influence key operating, investing, and financing decisions, as well as guide your business toward increased profits and growth.

Here are just some of the reasons why bookkeeping is important for your business:

Enhances budget accuracy

A budget is a financial roadmap for your business and its accuracy is essential for the success and growth of your company.

With proper bookkeeping, you can assess your company’s financial resources and expenses to establish a budget that suits the needs of your business.

Helps you plan for the future

In order to plan a successful future for your business, you first need to understand its history and where it currently stands. Well-managed bookkeeping provides an overview of your company’s foregoing financial performance and offers insight into what works and what doesn’t. Using this information, you can establish a plan that optimizes the strengths of your business operation.

Prepares you for tax season

Each year businesses are required to file a tax return. And yet, every year hundreds of business owners frantically scramble to locate receipts and invoices at the last minute. Eliminate this stress with bookkeeping!

Having a set of accurate and organized books year-round enables you to easily calculate the amount of tax owing while reducing the risk of late payments and penalties.

Keeps company records organized

There are a few groups that will always take interest in your company’s financial records – the Canada Revenue Agency (CRA), staff, investors, employees, customers, and lenders – and it’s important to provide them with the information they request in a timely manner.

If your business is disorganized, you risk compromising your relationship with the above key players. For example, if you fail to provide investors or lenders with required documents, you could risk a stoppage of cash flow. Bookkeeping prohibits this by ensuring the information requested by these groups is readily available.

Allows you to analyze business performance

As mentioned above, bookkeeping provides a record of all business transactions. These regular financial statements are incredibly useful when analyzing the performance of your business. They allow you to monitor cash in and outflows and understand which forms of business are working or not working, allowing you to capitalize on your company’s strengths while building upon its weaknesses.

Trust DDL to ensure your books are in order

Now that you understand just how vital bookkeeping is for the success of your business, why not trust the best? Our team of professional bookkeepers will ensure that your books are in order so that you can focus on your business! Give us a call at (905) 680-8669 or request an appointment to get started.

Thursday September 1, 2022