What is Bookkeeping?
Bookkeeping is the first step in the accounting process and arguably the most important one. A bookkeeper will compile all financial data - from transactions to wages - and turn them into easy-to-read reports that are ready for future analysis.
There are multiple benefits to having a good bookkeeper, and with all the changes happening in the financial world, every business will want to have such a person on staff.
What Are the Benefits of Bookkeeping?
1. Detailed Recording
A thorough, dedicated bookkeeper will always keep detailed records up to date. This complete recording will not only assist you in supervising your business accounts, but will also be of great assistance once you need your financial statements — or once your company is audited — as this process will be much faster and much cheaper.
2. Always Compliant with the Law
A good bookkeeper will always comply with the latest legal regulations and will make sure all your accounts and books are up to date with any recent legal changes. Because the bookkeeper holds himself or herself accountable for any work that they do, you can rely on them to clear any mistakes. This saves time and effort for the bookkeeper, which in turn saves money for the company.
3. It Is Easier to Plan
Once you have a detailed recording and a better overview of the company's accounts, it is much easier to plan and predict the future. When you are confident in your data, you can solve issues quickly and you can grab any opportunities that present themselves, without having to fear miscalculations in the accessible data. Thanks to the overview of profit and loss evolutions in the balance sheet, you will be able to know exactly what to do and how much time you have to do it.
4. Instant Reporting
Even though you will need to wait for the accountant or the auditor to finish their reports to conclude official financial statements, you will always have an updated balance sheet to inquire about the current state of the accounts. You will be able to present these data to any interested party, providing additional confidence both in your work as a manager and in the company's health as a whole.
5. Better Relations with Banks and Investors
That confidence will definitely improve business relations with your investors and shareholders. Additionally, banks will be more willing to provide you with more affordable loans once they can see how your company is thriving. Any time an investor is interested in the health of your company, you can just show the current detailed sheets and prove that the company is making major success.
Helpful Resource: Why You Need a Business Bank Account
6. Better Tax Prediction
While the IRS will demand an official financial statement from your company for the purpose of taxation, you will be able to predict the outcome more accurately if you have access to detailed balance sheets over time. With them, you can keep an eye out for trends in your company's business and be more confident in the amount of taxes you'll be expected to pay at the end of the fiscal year.
7. Faster Business Response Time
When you have real-time information about the state of your accounts, you will be able to react quickly to any changes that happen to the market or to your business. You will know the extent of your resources and current expenses, providing you with accurate insight: is it the right time to act?
8. Faster Financial Analysis
As bookkeeping tends to be less expensive than accounting, it’s helpful to know that by having detailed records you will shorten the length of time an accountant will spend on analyzing your accounts and creating financial statements. This will not only diminish the cost of accounting but will also give you more time to act upon the information provided by the analysis and change any strategies you might have planned.
Helpful Resource: How to Analyze Financial Statements
9. Easier Audits
Producing financial statements is much easier and faster when you have a better data-recording model. You will have a much easier time conducting an audit than you would if your accounts are messy, disorganized or even slightly outdated. Any auditor you employ will just need to access the detailed balance sheets and compare them with the statements to know exactly what was done. They can produce their report quickly and any mistakes will float to the surface.
Get Help With Bookkeeping
There is not a single business person or company who wouldn’t benefit from having a detailed bookkeeper. And when you are hiring a bookkeeper online, you can have a much wider choice and be certain to find the best person for the job for the most competitive price. Because you’re picking from a larger pool, you’ll have more relevant, highly qualified professionals to choose from.
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