Date: October 21, 2022
Why Accurate Financial Records are Key to the Success of Your Business
Many new business owners lack the knowledge (or desire) to manage the financial aspects of their business. Oftentimes, entrepreneurs are so busy running the day-to-day operations that the financial side of things tends to get pushed aside and can feel overwhelming as it starts to pile up. However, having accurate financial records is the solid foundation that your business needs to thrive and grow. An estimated 65% of first-time business owners who had to close their doors quoted the reason as ‘poorly managed finances’. Here are some key takeaways to ensure that your financial records are on track.
- Make sure to keep business and personal expenses separate- A common mistake is to mingle personal expenses with business or vice versa. If the two are intertwined, you will not have clear visibility into the true performance of your organization. It’ll make it difficult to decipher what your revenue is, and which are business versus personal expenses. As your business grows, this becomes more and more detrimental not to mention that in the event of a dreaded IRS audit, you’re much more likely to have issues with the auditor, resulting in backed taxes, fines and penalties.
- Hire an expert – Trying to balance running your business takes up most of your time, so having a competent firm on your side (that can grow with you) is vital. Monthly accounting is important even when you are first starting out. Although it may be tempting to track everything yourself (maybe using an excel spreadsheet), it’s a smart move to hire an expert and utilize an accounting platform to store all of your financial data.) Not only is this an investment in your business, but it’s an investment in avoiding future headaches and stress. Having someone handle your accounting will save you time, safeguard your business and protect you from costly mistakes!
- Monthly Financial Reports– when you have accurate records, you will have insight into your business via your financial reports. Then you can make educated decisions for your business based on the financial data reflected in your reports. You’ll be able to see when you need to increase your sales, hire help, or possibly offer a new product or service. If your financial reports are inaccurate, it can impact your ability to raise business capital, take out a loan, and grow your business. If you ever want to sell your company or invite investors to join, you will need accurate financial reports to do so.
We love helping small business owners grow and thrive and reach their financial goals. Protect and invest in yourself and your business, by hiring a professional. If you need an expert on your side to help grow your business, or someone to handle your monthly accounting, or someone to sit down with you and go through your financials together – we are happy to help. Click here to schedule a complimentary strategy session with one of our business growth experts.