WHY IS BOOKKEEPING IMPORTANT?
Why is bookkeeping important?
A good bookkeeping system is like a good healthy heart in the human body. “How are they alike?” you wonder.
I believe that a good record keeping system is what pumps information to your business like the heart pumps blood to your body. Here are some reasons why you should get a good bookkeeping system:
Financial reports are the result of a proper bookkeeping system. These reports provide information to Management in order to plan marketing and sales strategies, inventory purchase and prepare for special events. It also helps management decide other financing strategies, such as investing, saving, and lending as well as to evaluate the company’s progress or lack thereof. Is the company growing? Stagnant or declining? Financial reports tell you that information and with it you can make decisions accordingly. Are goals being met? Not accomplished or better yet, exceeded? You must find out what you are doing right as to continue your growth.
A good record-keeping system provide Information to others. Banks, for example, want to see your financial reports when you request loans. The IRS, FTB, EDD and other governmental institutions want you to rely on a good recordkeeping system in order for you to report your income tax return or whenever they have a question related to your reporting. It is most beneficial to you to have all that information readily available as opposed to trying to reconstruct it a few years later.
At the end, it doesn’t matter what type of system you use. You can do it yourself or hire a professional bookkeeper. You can do it manually or use a software. Whoever does your bookkeeping, make sure that person is well-versed in debits and credits and is knowledgeable in accounting principles. Now that you know why bookkeeping is important, let’s take on the books!
A business is only as good as its infrastructure! When starting a new company, it may be easy – and almost second nature – to overlook the mundane tasks of accounting, legal paperwork, strategic growth plans, etc. for the more fun tasks such as product creation, marketing and advertising campaigns. In order to do what you love – which is to create products – I needed to have a solid infrastructure – the systems and processes that make the business possible – in place. The infrastructure is the foundation that allows and positions the business for growth; it is what gives you the freedom to create more!
from the book: “From Stilettos to the Stock Exchange: Inside the life of a Serial Entrepreneur”