Bookkeeping and Reasons It Can Profit Your Business
Put simply; if Bookkeeping were currency, its practices and methods would be the bloodline of every successful business. However, bookkeeping is a vital function of a legitimate business. Bookkeeping and payroll can also indicate how successful a business is; if the business is making a huge profit, you may want to reinvest the profit into the business. But what exactly is bookkeeping and how can it profit your business?
Bookkeeping, in its present-day form, was first practiced in 1494 by Lucia Pacioli, a Cistercian monk. The goal of bookkeeping was to ensure that all the financial transactions of a firm are legitimately accounted.
The name derives from the fact that financial transactions were kept and recorded in handwritten books, even though nowadays such records are usually stored electronically on computers. In a business context, the recording of financial transactions is called bookkeeping. These transactions take the form of sales, purchases, payroll, and credit paid or owed the organization usually referred to as accounts receivable. Although the job descriptions of a bookkeeper may vary from company to company, here in British Columbia, most bookkeepers are responsible for similar fundamental accounting tasks.
With the adoption of Information Technologies in home and offices, it is now possible for most businesses to maintain their payroll and financial records on their computers. Some choose to do so with Microsoft Excel App, although this can ultimately be cumbersome.
With that said, hiring the best bookkeeper or having a close look at your financial transactions ensure that the financial ledgers are accurate and the business is profitable.
Reasons Bookkeeping Can Profit Your Business
As a business owner, chances are you always want to handle the books yourself. After all, you went into the business all alone. But while the ultimate goal of every business owner is to succeed and enjoy the freedom that owning a business brings, it also means that expenses need to be monitored and kept as low as possible.
This mindset is substantial in ensuring the success of your business, as thirty percent of new businesses are predicted to fail within two years because of increased expenses and low profits. However, sometimes being frugal can only cause more harm than good.
Running your own business means handling an ever-increasing number of daunting tasks, but putting off managing your finances has unspeakable consequences. When it’s time for tax, what started as a small molehill of paperwork can turn into a mountain of unbalanced ledgers.
But while many business owners believe that payroll and bookkeeping software can do better and saves more money than hiring a bookkeeper, the reality is that this belief can cause harm than good.
Here are a few reasons why hiring a bookkeeper can profit your business
- Reduces The Stress Of Taxes
The stress that business owners pass through in BC during tax season is by no means a joke. We would all like to escape it, but taxes are necessary and an essential part of a business. Hiring a bookkeeper, even on a temporary agreement, means accurate and timely reporting of your financial transactions, accounts receivable, salaries, and budgets.
- Managing Your Profit Margin Is Feasible
Owning and running a business also entails managing your profit margin and a professional bookkeeper can keep track of these margins while offering useful ideas on how to leverage them into larger returns on operating expenses. Also, a bookkeeper can manage your monthly financial transactions, deal with payroll, take care of government remittances and ensure that payments are paid on time, allowing you to focus on growing your business.
- Lets You Take a Load Off
Running a business, especially in its early years, is daunting and very demanding. The truth is, the first few years of running a new business are often the most difficult, and many business owners struggle to survive. This usually means handling multiple tasks at once, which can translate into paying little or no attention to administration, a job that a good bookkeeper can help.
- Peace of Mind
Beyond convenience, bookkeeping can also provide you with peace of mind. Speaking on the benefits of hiring an external bookkeeper, the vice president of the Canadian Bookkeepers Association Jacquie Johnston said, “I received countless phone calls by panic-stricken business owners concerning the fiscal year” adding that “flexible scheduling and hourly rate allow business to pay for only what they need-nothing more, nothing less.”
- Helps you Keep a Clear Picture of your Company’s Financial Health
If you don’t have an accurate record of your business financial transactions, how can you determine if you’re making money? With accurate financial records and Monitoring cash flows, you can make better decisions.
Besides, comes time to secure capital to grow your business, being able to present your business past performance will help your company’s valuation.
Bookkeeping is one of the most critical administrative departments that business owners shouldn’t gamble. With the help of this department, it becomes easier for any business to get the financial transaction records kept and maintained in a more appropriate manner and with more accuracy. Again, it has been seen that the work related to this department is indeed a difficult task and requires a lot of effort and transparency on the part of the company or person who is responsible for taking care of the department. Therefore, it is essential to hire a bookkeeping company with experienced staff that can take care of this particular department.
There are many companies here in BC that provides bookkeeping services to businesses of any size. However, there is a need for extensive research before you enlist or hire any company.
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