There has been an explosion of new small businesses being started across the United States. While the global pandemic has certainly hurt some industries, others like shipping, warehousing, medical, education, and e-commerce have grown at a surprising rate. In 2021 alone, 4.3 million new businesses started. That is a 24.6% increase compared to the previous years.
The widespread assumption is that all the downtime we experienced during lockdowns created a necessity for new side hustles and business growth. However, the reality is probably not as dire as most people have simply had more time to dedicate to starting a new business.
Whatever the reason, this unlocking event has brought many first-time owners into a new need for accounting and bookkeeping services. There are numerous reasons to integrate proper organization of your financial situation, including:
1 – Helps You Maintain a Budget
If you do not know where your money is coming or going, you cannot plan ahead for future needs. A business has numerous moving parts like wages, operating expenses, inventory, and customer management. All of these require separate accounts to balance your income and expenses. The best way to assess your financial resources is to use bookkeeping to structure a living business operational budget.
2 – Keeping Ahead of Taxes
Being a small business owner involves wearing different hats to overcome various challenges. One of the more significant roadblocks you may face is dealing with filing your taxes regularly. Without bookkeeping software or services, you will not know how to organize your financial information into a communication method the IRS, state, and local tax organizations require for filing.
3 – Historical Record Keeping
The best way to measure how your business growth is progressing is to have a historical record of day-to-day, month-to-month, and year-to-year bookkeeping. You want to track how every single income line and expenditure are growing over time so you can lower operating costs while increasing expected revenue streams. This is essential to conducting comprehensive business analysis and a key element most consultants will want to review when helping you grow.
4 – Hitting Goals
Financial targets are the essential guidelines for business operations. Most small businesses have at least 2-3 stakeholders equally interested in the growth and development of profits. Quality bookkeeping allows you and your team to issue reports demonstrating how under or over current sales and revenue goals you may be for the month, quarter, or year. Without these benchmarks, there is no way to inform your team if they are making positive progress or not.
5 – Government Guidelines
Any business that has a physical building or sells retail items is going to need to report specific statistics and figures to local oversight agencies. This is not because they want to get inside your business operations. It is because they rely on the tax revenue they receive to operate the business of the government. Small businesses are essential to the lifeblood of infrastructure, from the roads you commute on to the fire department protecting your house during a kitchen accident.
6 – Learning Opportunity
The vast majority of small business owners have never been to business school. They may have an advanced degree in a related subject to the niche market they are selling within but probably could not distinguish between micro and macroeconomics. That is actually a good thing. Quality innovation involves the ability to learn while you act. Having bookkeeping as a part of your fundamental business structure offers you the opportunity to learn and grow as an owner. The more you know, the more you can develop better solutions to growing your business.
7 – Planning & Decision Making
Bookkeeping elevates your ability to make proper decisions about your business viability. You cannot plan without knowing the factors that will affect you down the road. If you want to invest in a new digital register system for your retail store, you need to know you have the capital to make the purchase. Without keeping track of your income and expenses, you simply will not be informed well enough.
8 – Customer Relations
When you do not know where or when your cash flow occurs, you cannot focus on customer needs. If you want to grow your business, you must have customer satisfaction. The easiest way to marry these two issues is to have solid bookkeeping with a streamlined cash flow so you can manage your customer expectations, billing, and resource allocation properly.
9 – Peace of Mind
Want to see a stressed-out human being? Find a business owner that cannot tell you if they are profitable or not. Operating a small business requires a ton of time, money, and effort. You should be rewarded for this devotion to a new enterprise. Having the calm and peace of mind that your business is operating at its best financial position is a great way to lower the stress of ownership.
Wrapping it Up
You do not have to be a full-time accountant to make your business profitable or working smoothly. All it takes is a willingness to be consistent with bookkeeping software or to make the logical decision to hire a qualified bookkeeper. Having a bookkeeper manage your income and expenses will make your business operations so much easier.
