8 Reasons Why Small Business Bookkeeping in Brisbane is So Important
Businesses are slated to spend $20.3 billion on payroll and bookkeeping by the end of 2020.
Every small business needs to maintain accurate records to run its operations efficiently. Knowing how your business is doing is a critical rudder that helps you avoid failure due to financial mismanagement, which is the number one killer for small businesses.
Bookkeeping focuses on daily transactions while managing the business, and it is intimately acquainted with all operations. Small business bookkeeping also helps deliver the information you need for higher-level business planning with other financial professionals.
Here are some compelling reasons as to why you need to use bookkeeping services in your small business.
1. Small Business Bookkeeping Informs Business Planning
If you want to develop a profitable strategy for your business, you need a thorough understanding of its’ past. When you consistently maintain a set of records for your company, you are preserving its financial history. Bookkeeping helps you understand the specifics of what has worked for your business before and what has not.
Armed with such knowledge, you can craft a strategic vision for where you want your business to be without being vague since you have a purpose and a definite target. Often, it will take factoring in the information from your financials to come up with a business strategy that won’t fall flat on its face or one you will not be unable to sustain.
2. Taxation Purposes
Ideally, your tax and bookkeeping functions ought to work together. In Australia, taxes for trusts, partnerships and sole traders are due by the 31st of each October. For companies, tax returns ought to be filed by 28th February each year.
To help you remain compliant, you will need the company’s financial information for the relevant period to meet tax filing deadlines. But how can you do that if you do not have the accurate information in the first place? Some tax professionals won’t even accept work from small businesses that have poorly kept records.
In addition, as a small business owner, chances are high that a bulk of your income comes from the company. Keeping excellent books also help you file accurate personal income tax as you have the information necessary for it that relates to your business.
3. Better Investor Relations
Once your small business receives any external funding, investors (and lenders too) expect regular information on the company’s progress. While there are many metrics that different investors might want to keep track of, virtually every one of them wants to have a line of sight on the money.
You need to keep accurate information concerning your income statement, balance sheet, and cash flow statement so that your investors can know how their investment is faring on. When those who support your company financially have accurate and timely information, they can make positive decisions that enable the business to grow.
Another critical aspect to recognise is that bookkeeping helps you have up to date records that future investors can depend on.
Thus, when you are raising future rounds of capital, it becomes easier to engage with potential backers as they can see how the company has been doing. Excellent bookkeeping will also grow their confidence in your abilities as a business owner.
4. Financial Management
It is virtually impossible to run your business sustainably if you don’t have a close focus on its financial management. For example, poor bookkeeping means that you won’t be able to track down any overdue accounts. As the debts pile up, your cash flow will become strained. Before you know it, operations begin falling apart.
Conversely, bookkeeping is essential in tracking what your business owes others. From employees to vendors, you need to be paying all due debts on time to retain healthy business relationships. Having upstanding records can ensure that you know what you need to pay, whom to pay, and when it needs paying.
5. Less Disruptive Auditing Experience
In the rare, and unfortunate, circumstance that you get audited by The Australian Taxation Office (ATO), the experience can be potentially jarring.
An audit team needs to dig deep, and the less information they have on your company, the deeper they have to dig. Ultimately, that ends up disrupting your business operations. Additionally, if the ATO feels that your books are disorganised, it motivates them to impose more penalties on your company.
6. Risk Management
Once your small business expands enough to require additional hands on deck, you immediately expose it to embezzlement and fraud. Such misappropriation can be from either employees or business partners you bring on board.
Excellent bookkeeping helps you identify any suspicious transactions in good time. For example, a common way for business partners to embezzle money is by making payments to fictitious consultants.
As long as your books are in order and you regularly inspect them, you will spot the unusual pattern and take the necessary measures before it’s too late.
In today’s business environment, you have to be nimble and adaptable. Building agility into all aspects of your company is fast becoming a critical trait. When you have a set of well-maintained financial books, you can quickly respond to any new market dynamics that your business encounters.
For example, if your suppliers fall through, proper bookkeeping can immediately give you information on what you usually buy, when and how so that you can pivot.
8. Focus on Your Core Business
As a small business owner, you are instrumental to the company at its early stage. Any attention you take away from it translates to progress the business might not make.
Hiring bookkeeping services helps you to relinquish tasks that are not core to your role as the founder. As a result, you can dedicate your energies to strategic planning and execution so that your company can grow.
Streamline Your Small Business with Bookkeeping
Financial mismanagement is a top killer for many small businesses. As a result, these companies spend significant sums investing in payroll and bookkeeping services to streamline their operations. Take advantage of small business bookkeeping to ensure you avoid financial mismanagement for your company to thrive.
KR Accounts is a certified bookkeeping and payroll company with scores of experience in helping small businesses manage their finances. Contact us today to learn how you can streamline your company’s financial management.