Good bookkeeping also means keeping records of previous tax returns and all your tax payments. With your records of the last year on hand, you shouldn’t have to go far for everything you need. Tax Recordsįiling your tax return is going to be much quicker and easier if you have thorough and reliable financial records to draw on. Producing that record is another task of bookkeeping. Every year you need to report your income on your tax returns. Effective tax planning includes good bookkeeping. One obvious benefit of bookkeeping is how it can help when the time comes for filing taxes. When thinking of the future and making the right choices for your business, you need to be as informed as possible about your business’s performance.īeyond planning and troubleshooting, consistent bookkeeping will also help you with other regular practical chores and challenges your business will have to go through. But, with accurate and up-to-the-minute financial data, you can spot problems or inefficiencies before they grow out of hand.Įntrepreneurs have to think on their feet, as a single decision in a crisis can put you on the road to success or failure. It’s easy to underestimate how valuable good bookkeeping can be for a small business. Why is Bookkeeping Important for Small Businesses? Bookkeeping is about keeping a complete record that reflects the basic facts of your company and its accounts. Accounting helps you plan efficiently for the future, address problems, and create financial statements and reports for investors.įor accounting to be done well, it relies on effective bookkeeping. In accounting, you look over your history of transactions for patterns and changes. The difference between bookkeeping and accounting is that bookkeeping essentially has to maintain the records, while accounting is about reading and using that record.

In a lot of ways, bookkeeping and accounting are two halves of the same coin. Difference between Bookkeeping and Accounting It requires accurate records of all of the exchanges of money and all the company’s financial obligations.īookkeeping needs to be quick and efficient to stay up to date and maintain an accurate and complete account of the company’s financial activities. What Is Bookkeeping?īookkeeping has to do with maintaining a consistent financial record of all the everyday transactions made by a business. Take the time to learn more about bookkeeping and why it’s so important. However, when you fail to focus on bookkeeping, you undermine your business and put your company at risk. So why spend time looking at the numbers when you could be meeting customers or making a sale? You started your business because you had an idea and a vision to connect with an audience and create something. Instead, it’s one of those secondary considerations many entrepreneurs assume they’ll have to pick up along the way.Īnd for many business owners, it continues to be an afterthought. No business can survive without bookkeeping, but few small business owners get excited about doing it.

Small business bookkeeping