Why do you need bookkeeping? Well, let me give you three letters, how about, IRS. Enough said? I’m kidding! A little… But truly, you’re not going to be able to accurately file your taxes with the IRS or fulfill the IRS requirements if you don’t have a bookkeeping system in place that allows you to easily pull reports and show how much money you have made. You want to be able to show where your purchases were made and for what reason. You want to keep up with your bookkeeping so that you feel confident when filing your taxes and if the CPA or the IRS ever have questions you can open up your records and direct them to the information that they are looking for.
Throwing together a spreadsheet at the end of the year is not ideal, and the IRS will not be very happy with unorganized bookkeeping. It’s going to raise red flags, it’s going to raise more questions, and I can promise it is going to cause more frustration and stress on your part. Now I say that but not to scare you into bookkeeping and make you feel like you have to do this right now and get this set up today or else the IRS is going to come knocking on your door. That’s not what I’m saying at all!
Beyond the IRS and tax requirements, the thing that I’m most passionate about is that you, as the business owner, need to feel empowered, you need to know exactly where your business stands financially. You’ll want to keep up with your books so that you can look at your budget and compare the actuals to see how you’re measuring up. You’ll want to look at your numbers and compare to the previous year or years, and see how you’re doing. It’s great to run a year after year report and really look at those numbers and see how your business has changed. By keeping up with your books, you will be able to prepare for the future and you’ll be able to start thinking about big purchases by looking ahead and knowing when it makes sense to move forward.
Up-to-date bookkeeping tells you who you owe, who owes you, how much money you’ve received and where it came from, how much money you’ve spent and where you’ve spent it, how much it costs to create a product or a service, how much equity you have in your business, how much your business holds and so much more. So there’s a lot of reasons to do your bookkeeping. You will not regret it by putting a bookkeeping system in place and getting started. Honestly, I think you will start to wonder why you ever ran your business without proper bookkeeping!
To learn more about the WHO, WHAT, WHEN, and WHERE of bookkeeping, make sure to check out our FREE bookkeeping course that is full of valuable information to get your bookkeeping started!
We hope that this course makes a positive impact on your finances!