What's the importance of bookkeeping, you may ask as a small business owner? Bookkeeping helps a small business owner understand the financial state of your company by producing financial reports that allow you to evaluate your profitability or lack thereof. Never under estimate the power of a good Profit & Loss statement.
A Profit & Loss statement will detail out how much revenue you brought in for the period and the expenses that came out for the same time frame. The expenses are listed by expense accounts, so not only can you see if your small business is profitable, but also where you can cut expenses to be even more so.
Tracking details will often times make a project more successful, because you know exactly where you are, and knowledge is power. You may not realize how much you spend at the office supply store until you start looking at the whole month, or possibly the whole year, and if you're trying to increase profitability, you may decide you don't need new fancy colorful file folders and instead will buy manila folders for a cheaper price. It's easier to spend when you don't realize you're in bad shape financially.
Often times small business owners, especially if they're a first-time entrepreneur, don't understand the power of bookkeeping and how they can make it work for them. It is seen as an extra expense that they will pay for when they are making more money, if at all. Filing receipts in a shoe box for your accountant at the end of the year will create a larger bill to pay at once (instead of being spread out over 12 months when doing your bookkeeping regularly), and you don't get the benefit of the data of where your money is going.
If you have bookkeeping questions, or want to talk about how financials can help you run your business better, drop us a comment!
Biz Boost Consulting is a Kansas City company made up of virtual assistants who own or have owned businesses in the area they are experts. Biz Boost helps you grow your small business without hiring full time employees.