The date is December 2022, and you are trying to assess the success of the thrift shoe business you started in January. So far, you only know that you sold well. You have no records of which shoes did better, which month you sold the most, your best customer, or whether all the money in your account is from your thrift business or another source. You want to know whether to continue the business next year or try your hands at something else, but there are no records to guide your decision.
If this person sounds like you or someone you know, this article will help you understand the reasons why every business – big or small, needs a sound bookkeeping system.
As discussed in this article, with a sound bookkeeping system, you will always know how much your business generates and which products or services are responsible for that growth.
We cannot over-emphasise the importance of good bookkeeping. Here are five reasons why your business needs a proper bookkeeping system.
- It helps you budget accurately.
A budget creates a financial roadmap for your business. With a budget in place, you can plan for future expenses for your business to help with growth. If you do not keep accurate and up-to-date records, it is much harder to get a precise budget because it’s all mainly guesswork.
- It helps you maintain organised records.
That last-minute stress of trying to find a crucial piece of business information can lead to missed deadlines and some errors. Businesses of any size can’t afford to make record-keeping mistakes, and proper bookkeeping can help with that.
By keeping business data regularly, staying on top of them and not leaving it to the last second, you will be able to maintain organised records. Over time, it will make it much easier to find the bits of information you desperately need in no time.
- It helps you set more realistic targets.
Every business wants to grow, but poor financial records can stop that from happening at the speed you want. With no accurate number or data to analyse, it is hard to set growth targets.
It may be the case that you did not hit the targets you set out previously because you did not make data-driven decisions. By staying on top of your books and keeping regular financial records, you can map your business goals more accurately and achieve growth.
- You learn in the process.
It does not matter if you are a complete newbie or a bookkeeping genius. Doing digital bookkeeping offers you plenty of chances to learn and fill in some knowledge gaps. It can be hands-on with an app, free workshops or even reading helpful content online.
Bookkeeping can teach you much more than you think about your business’ finances. Everything you learn will be beneficial for helping you make smarter business decisions.
- It gives you credibility before investors.
Investors need to know the financial performance of your business to determine if they would like to get involved. Proper bookkeeping provides up-to-date and accessible information to attract investors.
Now that you know the importance of bookkeeping, it’s time to start with Dukka.
As you can tell, bookkeeping is crucial for your business for many reasons. At Dukka, we understand that hiring a professional to handle accounting for your small business will come at a considerable cost to you, so we created free software to do it for you instead.
To help your bookkeeping journey, we created the Dukka app to help you manage all your business records in one place. Get started here.