In this article, we’re diving into the importance of bookkeeping, breaking down what it means, why it’s crucial for your small business, and addressing the burning question: Can you handle bookkeeping on your own or should you outsource it?
Let’s get started!
What Is Bookkeeping?
Bookkeeping is the tracking of your business’s financial transactions, both inflow and outflow. It’s the process of keeping your financial “books” in order.
When you launch your business, the early days may not have any transactions to keep track of. But, as soon as that first payment hits, transactions start flowing in and out.
Bookkeeping becomes your financial compass; documenting every expense, every income source, from office supplies to equipment, travel, and beyond.
Why Is Proper Bookkeeping Important?
As a business owner, keeping your company’s finances organized is crucial, and that’s what bookkeeping is for.
In addition, when tax season rolls around, you’ll want to have well-organized books since the information provided in your tax return to the IRS comes from your books.
Can You Do Books on Your Own?
The short answer is: yes.
The real question to ask though is: Is it a good use of your time as a busy entrepreneur?
Tools like Xero, QuickBooks, or Wave can assist in setting up and managing your books. For a handful of transactions, this might be manageable.
However, as your business grows, your transactions keep growing and it becomes more and more time consuming to keep track of them.
So it might not be the most valuable use of your time and there will come a point when it’s better to invest in an external accountant or bookkeeper, so you can focus on the core aspects of your business.
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