As a business owner, you’re focused on core activities that help your business grow, like sales, marketing, customer relations and production and delivery of your business’s products or services.
This can mean that the daily bookkeeping tasks of recording and tracking sales, expenses, payments and other transactions get put off for days, weeks or even months at a time, resulting in not having a precise understanding of your business’s financial health, uninformed business decisions, wasteful spending and potentially running out of cash, among other consequences.
Businesses are dependent on smart financial decisions and meticulous money management to survive. That’s why it’s always a good idea to use professional business accounting services to help you manage your business finances, maintain your books and advise you on important business decisions.
There are several benefits of in-house or outsourced bookkeeping services, and below are just a few.
A Professional Bookkeeper Helps You Stay on Top of Your Business Finances
It’s impossible to overstate the impact of your business’s financial health on its success or failure. Keeping your books up-to-date is the only way to know the true status of how your business is performing.
For example, at a high level, your business may be doing excellent sales numbers, but you may be paying out more in monthly expenses than you collect from your receivables, resulting in a negative cash flow. If this is not a part of your business strategy and you don’t have enough cash reserves, you risk defaulting on your debts, and you may be forced to take on more debt to avoid going under.
One of the benefits of professional bookkeeping services is that they provide you with valuable data that give you crucial business insights in real-time, allowing you to pivot to a new strategy or operating procedure when needed.
Not having an accurate and current picture of your business’s financial standing doesn’t have to result in losing your business for it to negatively impact it and your personal wealth. Without up-to-date records, you can’t properly assess:
- Your ROI on marketing campaigns.
- The most and least profitable of your products or services.
- How long it takes your clients to pay you.
- What your biggest expense is, and how to effectively reduce overall costs.
- The trajectory of your business.
Another benefit of booking and accounting services is the peace of mind that comes with knowing that a professional is managing all the associated paperwork documenting your business records and that your books are balanced, organized, current and secure and that your record-keeping complies with all applicable rules and regulations.
This way, if you are audited by the CRA for any reason, you have nothing to worry about. Completely removing those concerns and the work involved with financial management from your to-do list allows you to spend even more time on your core business activities – armed with the information you need to plan and optimize your business’s growth.
Bookkeeping Services Help Your Business Save Money
Another key business benefit of bookkeeping and accounting services is that with a financial specialist consistently recording and tracking your revenues and expenses and learning your business cycles, they become a subject matter expert on ways your business can save money. This allows them to begin organizing your finances and managing your accounts in such a way that you can:
- Take advantage of early payment vendor discounts by anticipating the optimal time to purchase supplies and services.
- Avoid late fees and penalties by ensuring payables aren’t missed, and payroll remittances are made on time.
- Reduce the amount of interest paid on loans with on-time payments and find opportunities for loan consolidation.
- Avoid costly data entry errors and duplicate payments.
Professional bookkeepers also save you money by maximizing every tax credit and deduction available to your business that the average small business owner may not be aware of. This can include knowing the best way to:
- Report your inventory costs
- Calculate depreciation of your assets
- Report intangible assets
On a related note, one of the common misconceptions about business accounting is that it only needs to be done once a year at tax time.
While your business may not need to hire a full-time accountant, to fully enjoy the benefits of outsourcing your bookkeeping and accounting activities, you should keep them involved in financial decisions throughout the year.
Reducing your tax expense during tax season is vital for reducing your overall business costs. But making tax-efficient decisions year-round makes your business more financially efficient and is best accomplished with the help of bookkeeping and accounting professionals.
Bookkeeping Services Make it Easier for you to Secure Funding
Should your business require capital to help fund your growth through investment or financing, your financial records need to be immaculate. Not only do potential investors and/or creditors need to be fully apprised of your business’s final standing, but having your financial plan prepared by a business accountant adds credibility to your application and shows that you are fully versed in all aspects of your business.
Your past payment and financial history will also be assessed, which means that if you’ve had a professional handling your finances, investors and creditors will feel more confident about your business’s financial decisions when considering your application.
The same is true if you intend to apply for a loan, grant or tax subsidy from the Government of Canada, funding from the Ontario government or a business benefits program from a governmental or non-governmental organization. They also require detailed financial statements and a realistic financial plan based on numbers.
Coincidentally, assistance drafting loan, grant and subsidy applications is another benefit bookkeepers and accountants provide.