Bookkeeping can be defined as the activity or occupation of keeping records of the financial affairs of a
business. Bookkeeping is the best way to keep your business organised as it helps you easily budget for your business and keep a record of
tax returns.
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Here are six reasons why bookkeeping is very important for your business.
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Helps In Accurate Budgeting
If you want to avoid financial loss and other forms of business frustration in the long run, it’s expedient that you budget accurately. The problem of over-budgeting or under-budgeting can cause your business a whole lot. A budget creates a financial roadmap for your business, and you can create a good financial roadmap for your business if your books are in order.
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It Keeps You Tax Ready
At the end of each year, your business will have to file its taxes and present them to the constituted authorities. With good bookkeeping, you can easily identify your tax payment rather than running around looking confused during tax season. When the Federal Inland Revenue Services come knocking, you can easily present your financial statement without hassles.
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Organizes Your Company
The reason why businesses fold up is that there is poor financial management due to poor bookkeeping. In order to organise the business’s income and expenditures, the function of bookkeeping is very pivotal. This prevents the business from making mistakes that can be costly. Having an organised financial record can help you achieve your business goals.
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It Helps In Understanding Business Growth
When the bookkeeping is right, you easily tell if your business is growing or not. You can even tell at what rate it’s growing. Armed with this information, you can re-strategise to either building up or consolidate on business successes. A good financial record can give you the needed data to analyse your business. Bookkeeping is like a report card for businesses.
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You Can Easily Get Funding
Whether you want a loan from a bank, funding from an investment company or an angel investor, the first things you’re asked to present for receiving financial handouts are your tax and financial statements among other documents, and an effective bookkeeping business can easily present this to them. Banks and investors are really excited about companies that have good record keeping. With your presented financial and tax statements, investors and banks can predict how fruitful your business will be in record time and thus can invest in it if they see any future potential growth.
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It Gives You Peace Of Mind
When your books are in order, you can have peace of mind. With an accurate bookkeeping record, you can keep the tax officers from blowing hot on your neck. Secondly, accurate bookkeeping can help you have well-defined objectives and give you a sense of direction rather than running your business based on speculation and financial uncertainty.
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This article was first published on 6th September 2021
nnaemeka-emmanuel
Nnaemeka is an academic scholar with a degree in History and International Studies from the University of Nigeria, Nsukka. He is also a creative writer, content creator, storyteller, and social analyst.
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