Your business story needs words, it needs a narrative and that’s why bookkeeping is important for your business
What is Bookkeeping?
‘Transactions’ is just another way of saying where you spend your money, when money leaves your bank account, and when money comes into your bank account.
All those activities or transactions result in some form of record being created along the way. Keeping track of those records (for your health as well as your wealth) is called bookkeeping.
According to Dee Hock “Making good judgements when one has complete data, facts and knowledge isn’t leadership – it’s actually bookkeeping.”
Those words sum everything up nicely.
Bookkeeping is not about having a library of business books, but it’s a term applied to organising all those records from your transactions – all those receipts, invoices, and statements you have flying and lying around.
Whether they’re on email, or they’re stuffed in your kitchen drawer in paper form, or whether they’re tucked away in a filing cabinet along with a load of other A4 documents, you need some way to organise and get those transactions recorded.
Why Bookkeeping Is Important for Your Business
Bookkeeping may not be sexy for some; the thought of filing and paperwork may make you want to watch drying paint! However, Bookkeeping Is Important for Your Business and makes the rest of your business easier. What’s not to love?
For many businesses, bookkeeping is a once-a-year thing. Here’s what normally happens
- Firstly, you gather up all your bits of paper and any form of records you may have;
- Secondly, you take them off to your trusted financial person;
- Thirdly , your accountant blends that folder of stuff into something useful. For example, how much tax you need to pay, or get back – we can dream.
There are lots of reasons why bookkeeping should be taken more seriously, however, and why it’s something that we should be doing on a more regular basis than once every year.
An effective bookkeeping system will bring immense satisfaction, power, and knowledge. It will tell you which customers are working well for you, and where your money is going. It will make you accountable and it will show you the direction that your business needs to follow. You need to know the profits that you’re making and the money you may literally losing (because it does sometimes happen that you will lose money). Those records, however, can pinpoint what, where and why before it’s too late.
Of course, whilst bookkeeping is more than useful to us as business owners, it’s also a wonderful tick in the box for compliance. If you’re registered for tax (which I am hoping and praying that you are), HMRC may wish to see what’s going on in your business, and these records are a great start. You may have to do your annual accounts once a year, but if you’re registered for VAT, then you may need to do those on a quarterly basis. Whatever the timeframe is, we need to keep these records for those who may wish (and need) to see them.
Recording & capturing your numbers
Fundamentally, bookkeeping is one business task that you should not – and cannot – evade. Your financial transactions are going to show what you spend and what you bring in – literally the ins and outs of your bank account. It’s not just a question of keeping note of them for the sake of it, because they actually give you power, confidence and ability both to navigate and tell your business story in words as well as in numbers.
“In business”, says a wise young man named Amit Kalantri, “people with expertise, experience and evidence will make more profitable decisions than people with instinct, intuition and imagination”.
That’s a superb way of summing up the importance of bookkeeping. You can only grow a business should you have the expertise, experience and evidence garnered from the foundations of what you actually do.
Now, let’s get down to what systems we should be looking at.
Connect to the Cloud
My favourite tip has been kept to the end. There is nothing stopping you managing your business numbers, powered by paper and spreadsheets. In fact, it’s better than doing nothing.
If you prefer to liberate your time, inject some productivity and efficiency into your business, and make more money? If you want to connect with your numbers, navigating your business present & future with ease. Then embrace Cloud Accounting to do the power lifting of recording and fetching the numbers for you.
Automation and streamlining processes happen with Cloud Accounting. Cloud Accounting records with ease & panache all your financial transactions. Your Cloud system can connect with you bank, web site, CRM, spreadsheets. Cloud Accounting does the power lifting of record keeping. Processes can be automated, and bank feeds set up. Paper does a vanishing act, and your phone doubles up as a member of your accounts team.
Cloud Accounting brings information gold dust to your business. All from less than a weekly cup of coffee. You’ll see where you stand financially, what to improve, keep the tax bods happy, and tell your business story in numbers.
Conclusion
A good bookkeeping system can release the power of your numbers. Blended with your vision, inspiration and perspiration can only be a force for good.
Are you ready to have an easier and more rewarding relationship with your numbers? Make them work for ? The grab a copy of my book I Hate Numbers. It’ll help you understand and be a better business owner. According to one reviewer “This is the best, most straightforward, pragmatic, and enjoyable book I’ve ever read on finance for business.
It’s a must-read for all entrepreneurs. Your clarity, humour, wisdom, and great advice shine through as you make numbers accessible and easy for everyone.”
Get in touch with us to help make your life easier and stress free. Contact us if you need help figuring out and sorting your numbers, creating your future financial story plans, your tax , payroll and other accounting and business matters.