Bookkeeping involves accounting for the money you make, the money you spend and how you keep track of both. It can be a tedious and time-consuming task, but it’s also critical for your small business to be in good standing with your lenders, employees, and tax authorities. That’s why is monthly bookkeeping is so important for your small business!
What is Monthly Bookkeeping
The importance of bookkeeping goes long way. Monthly bookkeeping is a general term for all of the accounting activities that are done on a monthly basis. A conventional ledger is a simplified form of bookkeeping system which records financial transactions. They are organized by date and then by account name. In this way, it is easy to see the balance in any individual account at any moment in time.
5 Reasons Why Is Monthly Bookkeeping Important For Your Small Business
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It’s A Tool For Helping You Budget For Bad And Good Times
Your small business should know what it is spending, what it has and how much is left in the bank. You also want to be aware of some things that could go wrong, like unbudgeted expenses or missed payments.
For this reason, why is monthly bookkeeping important for your small business knowing how much you have to work with each month is important so your small business knows how much it can spend versus how much you actually made. If you miss out on income such as interest on your investments, you may be able to cover that shortfall by cutting spending and making up for it later.
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It Helps You Make An Impact On Your Company Culture
This is a great way to set a budget and see where your money is going so you can take a look at it from an accounting standpoint and if you find that there are some areas that need attention.
For this reason, why is monthly bookkeeping important for your small business knowing, you may not necessarily think this but it’s a great way to make sure that everyone knows where things stand financially and how to budget for the month or year ahead. It gives you another chance to see how your business is doing so everyone can look at their short-term goals and long-term plans, which ultimately helps everyone work together as a team.
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It Helps You Prepare For Changes In Your Business
It’s good to be prepared ahead of time when things seem to be going well so that you’re not caught off guard if they take a turn for the worse. Having weekly or monthly budget reports prepared allows you to look at your finances and see what you can afford versus what your business needs.
The more information you have the better off you’ll be in the event that there is an unexpected expense, loss of income or any other problem. It’s also a great way to learn how little you need to save each month for unexpected expenses and how much of an emergency fund should be set aside for those circumstances.
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It Gives You A Report On Your Business
If you have your bookkeeping done on a regular basis, you can get a report on the following month’s finances. This way you can identify any problem areas before they become a financial crisis. If there are problems that pop up, this is a great way to see where the issues are and how much time you have to resolve them.
You don’t want to wait until the end of each month or quarter to find out that there is trouble so it’s best to address these issues as quickly as possible. That will give you enough time to prevent those problems from becoming truly bad, and help your small business grow further instead of stalling because of financial woes.
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It Helps You Control Costs
For this reason, why is monthly bookkeeping important for your small business, it’s good to have a general idea of what your small business has available so you can make decisions based on that data. If you know that there is a fixed amount of money coming in, it’s up to you what to do with it. You can choose how much to pay yourself, how much will go into buying new equipment or working on upgrades, and where you want the rest of the money to go towards.
If your small business is growing, this will let you know where things are at and let you make moves accordingly. If the numbers just aren’t adding up the way you’d like them to, it may be time to look at your model and see where you can make changes that will give you the results you desire.
