“Team, this is Mr. Fancy Accountant. He’s going to tell us how bookkeeping can help our business.”
“Your business owes over $50,000 in tax. How will you be paying?”
“What!? We could deduct all those expenses! And what does this have to do with bookkeeping?”
“We would deduct those expenses, but you don’t have any records. So we can’t book any of it. If you had a bookkeeper documenting it, we’d be able to deduct.”
“But I bought all those business supplies. I checked with the CRA; they said it’s deductible.”
“If it wasn’t written down, it didn’t happen.”
“I should have a bookkeeper on my team!”
Bookkeeping is essential to your business.
In the world of accounting and bookkeeping, without a set of records, you have nothing to show for all your hard work – it’s as though nothing happened. Bookkeeping, in a nutshell, is the creation and maintenance of your business records. You need them for all kinds of things that help you and your business succeed, like business loans and tax benefits.
But what is it that bookkeepers do? Why is bookkeeping required? And how can bookkeeping help your business?
Bookkeepers are the most important members of your financial team
- Keep your financial records up to date
- Reduce tax penalties
- Minimize interest expenses
- Collect receivables (cha-ching!)
- Manage payables (reduce late fees)
- Build your business credit
- Help maintain healthy cash flow
- Spot business problems
- Prepare financing and loan applications
- Support applications to fund expansion
Unfortunately, bookkeeping is usually a drastically overlooked segment of the financial team. The cheapest option available is often sought out. An underqualified or inexperienced bookkeeper can create many more problems than they solve.
Why a good bookkeeper is required
All financial professionals, including the lenders and the investors you’ll need to grow your business, will rely on the financial data organized by your bookkeeper. You can’t get a business loan with a shoebox full of receipts. If your financial records are questionable, investors and lenders will shy away from working with your business!
Even more important, good internal financial management leads to good business decisions. If management makes decisions based on faulty information, your business will suffer. For example, if your business expenses are understated because you haven’t kept track of what you spent, your business could be paying more tax than it has to. A good bookkeeper saves you money!
Good bookkeeping is a must!
Why is bookkeeping required? Your bookkeeper is the most important member of your finance and accounting team. All other financial professionals will rely on the information they provide. Making sure you have a bookkeeper that is right for your needs is money well spent. They provide you with the data and knowledge you need to succeed, and knowledge is power.