Like keeping a schedule, checking email and having a content plan in place, bookkeeping is one of those non-negotiable to-do items for your business. That doesn’t mean you have to hire someone to do it for you, but it does mean that it needs to get done.
You need to pay attention to your business’s books for the same reason you should have a personal budget: to make sure that you have the funds in place to pay your bills without overdrawing your account. But there’s so much more to it too.
Financial Planning
Do you know where your business is going? How much you want to grow in the coming years? Do you have a long-term goal for your business?
Keeping a close eye on your books allows you to see where your business is right now and how you will plan for the future. It allows you to make educated decisions about where you’re going to spend your profits and how you’ll use them to grow your business or create efficiencies.
Keeping Tabs on Taxes
Taxes are non-negotiable, no matter where you are in your business. But paying your taxes in full on April 15 isn’t realistic for many business owners (unless you have a heap of cash laying around). That’s why keeping track of your books is so important—so you can make your quarterly estimated tax payments on time and avoid the crunch in April.
Separating Business from Personal
When just starting out, many business owners tend to run their business budget out of their personal account. What they don’t realize is that their business expenses can quickly dip into their personal finances, getting both into trouble. Taking care of bookkeeping issues regularly helps to keep those funds separate (as does having separate personal and business accounts—which I recommend all my clients do).
Differentiates Between Business and Hobby
At the same time, knowing your business is profitable can give you the confidence boost you need to keep growing. If you’re not making money each month, there’s a good chance that you’re running a hobby—not a business. And knowing this can help you look close and hard at the numbers to determine if you should keep moving forward or cut your losses and try something else.
I get on the phone with business owners every day and I’m shocked at how many can’t balance their books—or have never even tried. If you need help getting your books back on track or need some guidance so you can do it yourself, get in touch with me. Let’s find a solution that works for you.
