Importance of Bookkeeping

Bookkeeping, yuck! I have not found a business owner who enjoys the process of bookkeeping, unless they are bookkeepers, and some of them don’t really enjoy it. It is something all business owners and entreprenuers must do, or have done for them. They see it as an expense and of little value until tax time. I would like to help business owners and entreprenuers see this as an investment in thir business rather than a necessary administrative expense.

What is bookkeeping? Dictionary.com defines bookkeeping as the work or skill of keeping account books or systematic records of money transactions (distinguished from accounting). via Bookkeeping | Define Bookkeeping at Dictionary.com This is a good basic definition. Today, many bookkeepers and accounting applications take the information recorded through the bookkeeping process and presents it in reports that are beginning the “Accounting” process.

Why is this important? There are several reasons, but they all hinge on the need for accurate bookkeeping. Let’s look at some of these reasons.

  1. Business Planning
  2. Tax Reporting and Compliance
  3. Business Descision Making
  4. Cash Flow Management
  5. Building Business Value

The business functions mentioned above can have a dramatic effect on a business. Tax reporting and compliance can cost a business thousands of dollars if it is inaccurate or not taken care of in a timely manner. Cash flow management provides for a better cash flow, offsetting one of the main reasons businesses fail. Business planning sets the direction for the business and helps generate profits. Business decision making is enhanced with good bookkeeping and reporting to help make sure decisions are based on factual, accurate information. When all these are working together, the value of a business with good cash flow and profits, increasing, builds value for the business.

While the list isn’t comprehensive, these functions are part of a successful business model. I will expand on these functions in future posts to help you better see the value. 

Please feel free to comment below. I will appreciate your input.

 

About the Author David Maher

David is an Advanced QuickBooks and QuickBooks Online ProAdvisor. He has been working with QuickBooks since 1999. David earned his BBA degree from the University of North Texas. He has also completed post graduate studies toward his MBA at the University of Phoenix. He has expertise in many fields related to small business. His philosophy is centered around a one-to-one relationship with his clients, working to custom tailor a program to meet their specific needs.

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