Bookkeeping Keys to Small Business Success
by Dan Wywrot, on Mar 7, 2019
When it comes to business accounting, there is no such thing as being too organized. Whether tracking invoices, billing, or tax forms, a well-run financial operation is crucial to success and can help preempt problems down the road. Particularly for small businesses with lean financial teams, ensuring all financial resources are at their best can save time and money. These financial processes include more advanced accounting like tax preparation and financial analysis, as well as day-to-day tasks like bookkeeping. There are many components of financial strategy that fall under bookkeeping, including:
- Invoicing: A seamless process by which invoices are created, sent, recorded, and followed up on in a timely manner
- Historical bookkeeping cleanup: Log/categorize outstanding transactions to bring your books up to date and ensure your records stay current
- Payroll: Process payroll on your software of choice, ensuring employees are paid in an accurate and timely manner
While it may seem like a more basic accounting process, proper bookkeeping is at the heart of more advanced financial strategies, and helps ensure organization-wide alignment around financial progress and goals. It is important to have an understanding of where a lack of bookkeeping strategy can pose a business risk and how great bookkeeping can drive success.
Bookkeeping Keys to Business Success
A dedicated bookkeeping strategy is essential to long-term business success. It helps keep the financial department—and organization as a whole—organized, well-informed, and fiscally prudent. There are several advantages to proper bookkeeping:
- Audit Readiness: While an audit is never something a business looks forward to, a well-developed and long-term bookkeeping strategy can keep one from becoming a major business disruption. Organized bookkeeping allows the finance team and auditors to easily refer to relevant financial records and make the process as smooth as possible.
- Improved Financial Management: The first step toward a mature financial strategy and advanced financial analysis is having the information to understand the big picture. That is where good bookkeeping comes into play. Proper bookkeeping helps keep all departments better informed and enhances strategic thinking.
- Tax Season Preparation: When tax season comes around, the entire financial team will be grateful for a year’s worth of organized bookkeeping. Having easy access to all financial documentation will save time and most likely money as the accounting team can more easily discover potential tax deductions.
Wherever you are in your financial life cycle for the quarter or year, you do not want to find yourself in a situation where your finance team is scrambling. Dedicated bookkeeping helps keep financial forms and paperwork in the right place so it is easily accessible when teams need it, ensuring a proactive approach.
Bookkeeping and Your Small Business
Small business owners often have the understandable goal of keeping teams lean, with finance being no exception. For that reason, ensuring the team has a dedicated bookkeeping resource may not be an organizational priority. However, especially for small businesses, not having a bookkeeping strategy can pose a serious risk to the financial health of the organization.
Without proper bookkeeping, it can be very hard to know if there is a problem with your business financial records or a threat to the financial health of your business. This can leave the organization flat-footed in the event of an audit or unexpected business change, and can also lead to uninformed business decisions. In addition, without thorough bookkeeping it can be easy for financial problems to go unnoticed, often until it’s too late to respond properly. However, aside from reducing risk, proper bookkeeping has many other business advantages.
First, prioritizing bookkeeping can help keep other parts of the financial organization lean because the team will have the tools and resources they need to perform financial analysis and planning. In addition, organized bookkeeping reduces business risk by keeping the organization financially well-informed and better-prepared for an unexpected financial event. Lastly, good bookkeeping helps your organization plan for the future, prepare for business growth, and exercise strategic financial thinking.
Leveraging Bookkeeping Resources
The first step to deploying a bookkeeping strategy for your small business is ensuring you have the right tools and resources in place. Proper resources include everything from financial software for managing data and information as well as skilled financial professionals.
Many small businesses feel that they do not have enough work for a full-time bookkeeping professional and they may be right. In these situations, a freelance finance professional focused on bookkeeping can be a great solution. This person can be brought in on a project-by-project basis or during particularly busy seasons. Either way, they are an essential component to a well-developed financial strategy. Organizations like Paro are able to find the right freelance bookkeeping team members to partner with your organization and elevate your bookkeeping strategy.
For organizations hoping to incorporate bookkeeping into their financial plan for the new year, it is important to take stock of how information is currently organized. With an understanding of the current state of bookkeeping and financial processes, it will be easier to find the right resources and develop an effective partnership based on where you are today and where you hope to go in the future.
Small business success happens with a focus on the big picture and the small details, which is where organized bookkeeping comes into play. A bookkeeping strategy means audit readiness, tax season preparedness, and a well-informed financial organization—handing you the keys to success for any small business.