Bookkeeping has many benefits and is an essential part of the overall organization and financial workings of your business. By keeping your books up to date, you’re building a solid foundation to hold up your business. Although it’s a tedious task, it’s an essential one! This blog shows how keeping up with your bookkeeping improves your financial organization and can make you a better business owner.
Staying on Top of the Money: Knowing what you make and what you owe
Without staying on top of your bookkeeping it’s difficult to see exactly what your money looks like from inside your business. To be well-versed in the financial operations of your business you first need to know if you are actually making any money or just moving it around.
By understanding how much money you are bringing in and how much of that is profit, you are making your life easier when it comes to any opportunities to save money, or more importantly when you go to file your business taxes during tax season. By having your bookkeeping completed consistently throughout the year, you are setting yourself up for a much easier tax time. On top of this, understanding what you make and what you owe will allow for a much smoother time if your business gets audited. You won’t have to stress about getting papers together because you’ve been organized and staying on top of things. Bookkeeping allows you to visualize your money and use that to plan and prepare for any unexpected scenarios!
Planning ahead is extremely important when it comes to knowing who you owe money to and how much you owe them – and yes, this includes the tax man! Being clear on how you’ll pay or pay back the money you owe is crucial in staying on top of your finances, and keeping business relationships on positive terms. Completing your bookkeeping weekly or monthly will provide you with clarity on this information ahead of time. You’ll be able to see exactly how much you have made and how much of that you have to set aside to pay for business expenses, taxes, loans and so on. Staying on top of things and being organized in this way will ultimately have you understand your business better and leave you less on edge about where your money is going.
Catching Errors and Dodging Avoidable Mistakes
Completing your bookkeeping regularly will help you catch any internal or external errors that may have been made and are affecting your business. Sometimes, banks make errors and as long as you are staying on top of your bookkeeping, you’ll be able to catch them early enough that those errors won’t have much of an impact on you or your business.
Bank errors need to be reported within a specific deadline. That’s why it’s important to stay on top of your bookkeeping so that you can catch these errors and report them as soon as they’re noticed. Not reporting these errors in time could potentially be financially detrimental to your business if not resolved. For example, in a story reported by CTV News Toronto, an Ontario man lost around 10 thousand dollars due to a banking error where a check was cashed twice. When the man went to go talk to his bank, he was informed that because he didn’t report the error within a 30-day window, he would be responsible for the money loss. It’s important to keep up with your bookkeeping on a frequent schedule so that you’ll be able to meet these strict reporting windows and dodge these avoidable mistakes. So often, these types of occurrences are out of your control as a business owner but, if you stay on top of what you can control, solving the issue will be easier and far less stressful.
By keeping your books up-to-date you will be able to make sure you are collecting every dollar you are supposed to be collecting. This means you’ll be able to catch any outgoing OR incoming payment errors. The sooner you come across something that doesn’t look right (i.e. direct deposit fails, transaction errors, missed payments from customers, etc), the sooner you’ll be able to correct that mistake and have the correct funds in your account.
Errors are inevitable when running a business, but staying on top of things enough and being organized is essential in making sure those errors get corrected and don’t have minor or major impacts on your finances.
Bookkeeping your Way to Being a Better Business Owner
It may seem like bookkeeping is just another tedious and irritating task that you have to do to run your business but, it’s something that can improve your overall well-being as an individual and allow you to perform better at work.
Mental and physical clutter contribute to your stress in big ways. Having a disorganized paperwork system can cause just as much stress as having tasks looming over your head. Having mental or physical clutter hinders your ability to be creative which will ultimately lead to more stress and procrastination. By reducing your stress surrounding the numbers of the business, you will have a weight lifted off of your shoulders, feel clear-minded when it comes to money and therefore, be able to perform better at work. When you are surrounded by clutter and disorganization, it’s more likely to put off important tasks as a result of being overwhelmed.
A good tip for staying on top of your bookkeeping so that it doesn’t feel like it’s impacting the time you need to spend on other projects is to schedule a weekly block of time to take care of it. Create a short to-do list to help guide you through what needs to get done, and break down the work into manageable tasks. Start by blocking out a couple of hours on a specific day each week to complete your bookkeeping and from there you’ll get a good sense of if you need more or less time to properly complete it, and it will become a good habit!
Stress is one of the worst things when it comes to your physical and mental health. So, we should be doing everything we can to keep our stress levels down as business owners and that means being organized and managing our time so that we can fit tasks like bookkeeping into our days. Making time to update the books will ultimately give you peace of mind in the long term and help keep your stress levels at bay.
Staying on top of your bookkeeping means becoming a better business owner and improving your mental state at work by letting your creative side shine with a clear mind!
It can be challenging to see the value of tedious administrative tasks like updating the books, and there are so many benefits! From getting more comfortable understanding your numbers, to catching unwanted errors, to reducing your stress; you’ll be on your way to being the best business owner you can be by completing your bookkeeping regularly!
If you are new to doing your bookkeeping, it can be a bit of a challenge. At UpSide Accounting, we try to make it as seamless and easy for you as possible. If you need help getting started or need some assistance staying on top of your bookkeeping and would like to explore working with us, contact us here. We are here to help!