Do you struggle to make financial decisions in your business because you lack clarity on what your business can and cannot afford?
Despite your business bringing in revenue every month- are you scratching your head because your monthly bank statements have you questioning where all your money went?
Do you scramble every year during tax season to pull together your numbers to file your tax returns?
If you are nodding your head- and feeling like I’m talking directly to you….
First things first. You are not alone.
You would be surprised the number of small business owners who do not understand the role that bookkeeping should play in their business. If you take nothing else away from this blog- I want you to understand that timely and accurate bookkeeping is SOOOO much more than a means to file your taxes. Keep reading to understand the role the bookkeeping should play in your business.
Bookkeeping is the process of organizing and managing the financial data in your business. No matter where you are in your business, there are transactions hitting your bank account. The process of bookkeeping aggregates and categorizes all of the financial data in your business to do two things:
When you look at your Bank Statements, Credit Card Statements, CRM- this is just a wall of data however, it’s really difficult to discern your business’ performance based on this information. This is where bookkeeping comes in- a good bookkeeper will take all of the various sources of financial information in your business, categorize these transactions in a bookkeeping software like Quickbooks, and produce a Profit & Loss Statement so you have insights on what’s going on in your business.
As a CPA and Virtual CFO- I decided that I didn’t want to offer tax preparation for The Blk Report’s clients. The reason for this was very intentional – I wanted Black owned business owners to understand that having a solid financial infrastructure and proper bookkeeping is more than just a means to filing your taxes. There is so much value in having access to organized financial data on monthly basis.
The reality is – it is very rare that you can run a profitable business on accident.
If you are only looking to scrape your books together to file your taxes you’ve missed out on a year’s worth of insights that could’ve been used to move the needle forward in your business.
Proper bookkeeping allows you to monitor the health of your business and to track the most important metric in your business – Profitability. You can be very good at selling your offer and serving your customers- but if you ignore the finances in your business you run the risk of having nothing to show for it. You should be aware of how much you are spending relative to the amount of money you are bringing in. If something isn’t working, monthly reporting allows you to have the data points needed to make timely decisions and pivot where necessary.
In short, bookkeeping allows you have to a pulse on the health of your business. It is important that this is maintained regularly- at the minimum on a monthly basis. If this is something you need support with- I would love to talk more about how we can work together. Use this link to sign up for a free discovery call to learn more about our Bookkeeping Services.