What is Bookkeeping? And Why Is It So Important?

Bookkeeping makes tax filing less complicated.
When tax season rolls around and you must provide your accountant with the necessary documents for filing business taxes, having clean books substantially cuts down on the time it takes to prepare tax documents. Rather than rummaging through your business receipts, the accountant can focus on finding possible tax deductions, saving their time and your money.

​Bookkeeping provides key insights into the overall health of a business.
Bookkeeping enables businesses to produce financial statements, which collect financial data and paint a clear picture of how your business is really doing. These statements help you manage cash flow, which is essentially how much cash is coming in and leaving your business at a given time. Cash flow projections are pivotal to the growth of a business, as they can entice potential investors and satiate existing ones. Understanding your business’s financial health eases making future plans involving hiring, expansion, and day-to-day operations. Financial statements, such as your balance sheet or income statement, give you the information you need to make decisions from an informed perspective rather than a taking a gamble.

Bookkeeping lessens the pain of an audit.
​Businesses always run the risk of one day being audited. While it’s not something to look forward to, it’s definitely worth preparing for. Having all your bookkeeping organized and in one place will make it easier to retrieve your business’s financial information and can help avoid penalties or late fees.

When it’s time to outsource
​There are an abundance of reasons it might be time for you to outsource, whether it’s assistance with driving growth or if you’re just struggling to keep up with these tasks on your own.

Outsourcing bookkeeping and accounting tasks come with a ton of benefits, like improving data security, increasing valuation, and saving time. Regardless of how in-tune you are with your business, financial guidance makes it significantly easier to discern the best next steps to meet your specific and unique goals.
​
If you own a new or small business, it doesn’t necessarily make sense to hire a full-time accountant, which will cost you. That doesn’t mean, however, you have to do it all on your own. Bookkeeping and accounting are challenging skill sets to learn, and it’s important that your business’ books and accounting are done right so you can make smart decisions and grow healthfully.

What is Outsourcing?
When you outsource anything, you’re giving specific business operations to a company outside of your own.
It may seem odd. After all, if you started your own business, why would you want anyone else to have a part in it?

The reality is that finance and accounting outsourcing (or FAO) has steadily become more and more popular in the business world for many years now.

In fact, as of 2018, nearly $33 billion is spent worldwide on outsourcing finance and accounting processes.
It has grown nearly 25 percent in the past five years and doesn’t show any signs of slowing down.
As odd of a concept as it may seem, it’s certainly nothing to scoff at.

Mike McVay, Accountant - 850-725-5696
Mike@MikeMcVay.com