Bookkeeping and Accounting
In order to keep track of your finances, you’ll need to set up a bookkeeping and accounting system. This is important so that you understand your business’s cash flow and will also be important for tax-filing purposes.
Here’s what you need to know about accounting and bookkeeping for your new business.
Why are accounting and bookkeeping important to your business?
The basics are pretty simple: you need to pay vendors, bill customers, make deposits, and pay your taxes. Beyond that it starts to get complex, pretty quickly.
The best way for small business owners and startup entrepreneurs to deal with that complexity is through careful planning, detailed documentation, and careful organization. The worst thing a business owner can do is to let those bills and invoices, pile up which can not only make things crazy difficult when tax time comes around, but can also serve to kill your cash flow and, ultimately, your ability to stay on business.
Accounting helps you plan for growth. If you don’t understand your financial information, you won’ know how to set proper goals.
Accounting will also help you to secure a business loan. Every lender, including every bank, will ask for up-to-date financial statements and statements dating back at least three years. And you’ll need to provide at least a one-year cash flow projection. You won’t be able to deliver any of these unless you have an accounting system in place.
With the right people in place and the right tools at hand, bookkeeping and accounting tasks can become relatively simple and the commitment of your time surprisingly minimal.