Keeping your books up-to-date is more important than you might think. Sure, it’s a tedious task. But the consequences of not keeping track of your finances are always severe. Better to take a few hours and organize your financial paperwork than to deal with the lasting implications of having no records at all!
In this post, we’ll give you some pointers on what bookkeeping skills are useful for CPA accounting firms and how to keep track of business transactions like invoices, receipts, and checks.
7 Reasons Why Is It Important to Keep Business Books Up-To-Date
1. Keep Yourself Out of Legal Trouble
You might not think that your business is susceptible to lawsuits, but a lack of organized financial paperwork makes you look suspicious. One of the reasons why is it important to keep business books up-to-date is, when disputes do come, you want to be able to prove the legitimacy of any claims you might have. And if you can’t do that, it’s an automatic loss for your company.
2. Be Able to Prove Ownership of Assets
Think your company is in good financial condition? Just purchase a few shares of stock. One of the reasons why is it important to keep business books up-to-date is, not only will you benefit financially, but you’ll also be able to prove that your company owns the share. And thus owns the private business assets (such as a car or savings account).
3. Avoid the Cost of Unpaid Bills
Bills aren’t paid for a reason—the money isn’t there. If you’re like most business owners, you’re in dire need of cash flow. You pay your bills when you have the funds to do so. But if you have no records or way to prove that you did in fact pay those bills, it’s going to be difficult for you to get any money out of your business bank account.
4. Make Tax Time Easier and More Effective
Tax time is filled with plenty of stress and anxiety, especially if you don’t have any records to work with. That’s why it’s important to use accounting software that tracks your business’s financial activity—it makes tax time much easier. You don’t have to worry about matching up your tax forms with the information in your business’s bank account or accounting program, which saves a lot of time.
One of the reasons why is it important to keep business books up-to-date is, using some sort of accounting software also allows you to complete necessary tasks like payroll, which will cut down on the amount of time you spend working during tax season. Your accountant will thank you too!
5. Keep Your Business Operations Running Smoothly
How can your business run smoothly if you can’t track your finances? Some things are more essential than others. If you want to avoid having to shut down or reduce your offerings to customers, keep track of which customers paid you in full, how much they paid when they paid it, and more. This doesn’t require a lot of time by itself—but when you’re operating without it, things can get pretty messy.
6. Keep Your Business More Organized
Organized business books help you stay on top of things. If you can keep track of your business’s financial activity, it’ll be easier to remember which bills need to be paid soon and which tend not to pay their bills on time.
This will keep your cash flow more predictable and allow you to budget better. Think of how much more organized your business would be if you had a permanent record of all transactions that occurred during the last six months!
7. Avoid Potential Fraud
The consequences of fraud are serious—and they can really affect the bottom line of your company. One of the reasons why is it important to keep business books up-to-date is, if you don’t use accounting software, you’ll be left with no record of how much money you received and how much money you spent.
Without the ability to track your financial activity, it’s easy for people to believe that your business isn’t as profitable as it really is. This will lead to bad financial decisions and shady motives, which could pose a problem for your company in the long run.
So make sure that keeping your books updated is a priority—it’s one of the most valuable assets you can have as a business owner! To know more contact us at OrangeIQ today!
