Bookkeeping often feels like a boring business task.
It’s one of those things that needs to be done to ensure accurate financial records and to get all the green reconciled ticks in your accounting software!
Would you believe us if we said that its importance goes far beyond number crunching?
You should! Bookkeeping plays a pivotal role in the growth and success of any business.
How does it do that?
Well, read on to find out how the task of bookkeeping is not only necessary for staying on side with the IRD, but is also a key player in helping you achieve your business goals.
How Bookkeeping Can Supercharge Your Business Growth
Bookkeeping is the recording, organisation and management of the financial transactions in your business. It includes accurately documenting all your incomings, outgoings, payroll and tax activities. Then, using that data, you can run reports and financial statements to get a clear picture of your company’s financial health.
Correct bookkeeping is a key part of good business. Having well-kept financial records ensures all of your data is accurate and up to date, that you meet your GST and tax obligations and that you are compliant with best accounting practices.
It is our advice that you use cloud based accounting software like Xero or MYOB to manage your bookkeeping. These intelligent tools will help you streamline your processes and reduce the risk of manual errors occurring, while allowing you to access your finances anywhere you need.
All of these things are vital foundations for building a successful business. They also position you for strong business growth. So, let’s delve deeper into some of the ways bookkeeping can help you grow your business.
Bookkeeping And Business Growth
How can a straightforward concept like bookkeeping be a tool for business growth? Well, this seemingly mundane task that you might grumble about doing can help you make informed decisions and tick off your growth goals.
These are some of the ways bookkeeping can help your biz supercharge and smash your growth plans:
You’ll note we mentioned the word accuracy a number of times in the short description of bookkeeping we just gave. Why is that?
Well, bookkeeping is only going to assist with business growth if your records are accurate. Effective bookkeeping is about being precise when handling your financial transactions. That way, you can understand the financial state of your business at a glance.
If your records are not accurate, then your data won’t tell the right story about what’s happening in your operation. That could leave you trying to make decisions without all the information, or worse still, the wrong information. Accuracy gives you financial clarity, so you should always aim for it.
Now we know how important it is to ensure your bookkeeping data is accurate. Accuracy means you can use your data to make better business decisions. That’s because you will be fully informed about how your business is currently positioned.
At a glance, you can assess the feasibility of starting a new project, extending a product line, or cancelling a poor performing product or service. And that’s just looking at the smaller decisions. There are also overarching decisions like setting your marketing budget, assessing expansion plans and exploring resources or upgrades.
When you are armed with the right data you can make better decisions for your business as you will know what you can invest and where, or when it might be time to pull back slightly.
Budgeting And Forecasting
A budget is like a financial roadmap for your business. It allows you to navigate the journey of your day-to-day incomings and outgoings, ensuring there is enough money to cover your expenses and still make your growth investments.
Using the data gathered from your bookkeeping, you can create a realistic budget, but also a forecast that plans for future expenses, sets revenue targets and creates the basis for sustainable growth in your business.
Without this data on hand, you’d be making a lot of guesses when setting your budget and forecasts. That’s a risky strategy as you’d never know if your best guess would be accurate or not! By maintaining accurate bookkeeping records, you can stop guessing and create realistic growth goals to work towards achieving.
Taxes And GST
An important part of running a business is making sure that you comply with tax regulations. While it isn’t the most fun task to part with your hard earned money, paying tax is actually a positive thing as it means your business is making money!
In saying that, you don’t want to pay more tax than necessary. Having accurate financial records to work from allows you to file correct returns for both your income tax and GST. This also allows you to take advantage of available tax deductions to save your business money. You can then reinvest those funds into growth objectives.
Bookkeeping has the ability to reveal inefficiencies within your business operations. By analysing your expenses, revenue streams, various products and services, as well as resource allocation, you can identify high and low performing areas.
Armed with that information, you have the power to amplify the areas that are performing well to maximise profit and drive growth. Plus, you can also identify areas where improvements could be made to increase efficiency and reduce costs or unnecessary spending. The flow on effect of improving efficiency is having more funds to invest in growth if you choose to.
Develop Long Term Business Strategies
We know that bookkeeping helps with your day-to-day financial management. But beyond that, the data you collect also helps you to develop accurate and realistic long term business strategies. Looking back, you can identify trends in your operations, along with strengths and weaknesses. These components are crucial for shaping your future growth plans.
There is also an element of risk management available to you via your bookkeeping data. By completing the analysis we just mentioned you can identify potential financial risks and take proactive steps to mitigate them. This ensures you can maintain financial stability and protect your growth prospects.
Bookkeeping – The Business Hero
As you can see, bookkeeping is about far more than simply recording the financial transactions for your business. It’s actually a key player in your business growth and success. Accurate financial records, insightful analysis and strategic decision making are all dependent on the quality of your bookkeeping.
Now is the time to prioritise your bookkeeping so that you are better able to navigate any challenges, seize opportunities that might arise and achieve your growth goals.
And the Admin Army can be alongside you to keep those financial records up to date and accurate! Our team of bookkeepers work diligently to ensure that you can maximise the business growth opportunities available to you.
So, book a time to chat with our team now and discover how we can wage war on your bookkeeping tasks so you can maximise the benefits.