Here are nine reasons why it’s important for businesses to have good financial recordkeeping systems. Use one, two or all of them with your next potential new client. Whether your potential client is devising or revising their bookkeeping routine, remind them that the purpose of your bookkeeping business is to help them manage their business tasks.

#1 Reason for Retaining Bookkeeping Services: Monitor the Financial Success or Failure of Your Business
It’s hard to know where you are going if you don’t know where you’ve been. The same is true with your business – it’s hard to know how your business is doing without a clear financial picture. A good financial system provides answers to the questions: Am I making money? Are sales increasing? How do expenditures compare to sales?

#2 Reason for Retaining Bookkeeping Services: Provides the Information You Need to Make Decisions
Evaluating financial consequences should be part of every business decision. Without accurate records and financial information, it’s difficult to forecast the impact of any given course of action. For example, financial information gives insight as to whether or not it pays to hire another salesperson. Accurate records reveal the profitability of any line item.

#3 Reason for Retaining Bookkeeping Services: Obtain Bank Financing
The best time to seek financing is when you don’t need it. The bank will want to see your income statement, balance sheet and tax returns for the most current and prior years, as well as projected statements showing the impact of the requested loan.

#4 Reason for Retaining Bookkeeping Services: Obtain Other Sources of Capital
If your business has reached the point where you need to take in a partner or investor, any prospective associate will want to become intimately familiar with your financial picture. Suppliers and other creditors may also ask for certain financial records. The source of this information is based on your day-to-day recordkeeping.

#5 Reason for Retaining Bookkeeping Services: Prepare a Budget
All businesses should use budgets for planning purposes. Budgets keep businesses on track by forecasting cash needs and controlling expenditures. When companies seek financing, bankers or prospective investors look for budgets as evidence of planning and stability.

#6 Reason for Retaining Bookkeeping Services: Prepare Your Income Tax Return
No matter what your business entity, you must file an income tax return and pay income taxes. With good records, preparing an accurate tax return will be easier and filing will more likely be done on time. Poor recordkeeping may result in underpayment or overpayment of your taxes. If your CPA prepares your tax return, poor records could result in higher accounting costs.

#7 Reason for Retaining Bookkeeping Services: Comply with Federal and State Payroll Tax Rules
If you have employees, you are aware of the myriad of rules and regulations relating to payroll taxes. Payroll tax must be deposited according to strict deadlines. Late payments of payroll taxes result in severe penalties, including jail time!

Payroll tax returns must be filed quarterly, and must reconcile with payroll deposits made during the quarter. At year end, you’re required to give employees and the government W-2 forms, which must agree with your quarterly payroll returns. Sound bookkeeping practices, even if you use a payroll processor, will make compliance with payroll rules easy. Poor records will make it impossible.

#8 Reason for Retaining Bookkeeping Services: Submit Sales Taxes
If you collect sales tax, good records make it easy for you to compute the tax due and prepare the required reports. Sales tax must be deposited according to strict deadlines. Late payment of sales taxes can result in severe and unnecessary penalties and interest.

#9 Reason for Retaining Bookkeeping Services: Distribute Profits
If your business is a partnership, you will need good records to determine the correct amount of profits to distribute to each partner. If you’re operating as a corporation, profits that you’ll be paying out as dividends to the shareholders must be determined.

Author Laurie O’Neil

Bookkeeping and account reconciliation are both tedious and repetitive tasks that a business must complete on a regular basis. In order to accurately enter and categorize a business’s transactions, it is important that a bookkeeper have a proficient knowledge of QuickBooks and industry terms. In order to accomplish this bookkeeping and reconciliation work, most companies employee a full-time bookkeeper or have an in-house accounting department to complete the work.

Employing bookkeeping staff is an extremely costly venture. The costs of employing this staff include payroll, benefits, worker’s compensation, unemployment insurance, and the expended time and energy necessary to train an employee. In the event that the bookkeeper leaves your business, there will be an additional need for time and funding to train another person.

More and more businesses are now relying on outsource bookkeeping providers to conduct bookkeeping and reconciliation duties. By employing outsourced bookkeepers, a business can save both time and money. Not only are most of these service providers extremely affordable, but they also eliminate the expenditures necessary for payroll, benefits, insurance, and training. Outsource bookkeepers also save space in that they generally work remotely and will not take up valuable office space, as an internal bookkeeper would.

Most in-house accounting departments are not nearly as productive as outsource companies. Outsource bookkeepers conduct bookkeeping and reconciliation duties at all times and are experts in their field, as well as in using their bookkeeping software of choice. In the case of small to medium sized businesses, bookkeepers have many responsibilities and bookkeeping does not take up the entirety of their day. Therefore, outside service providers are able to find shortcuts and time-saving techniques that an in-house accounting team may not have the time or expertise to find. Many outsource bookkeepers also offer money-back guarantees to ensure that you are completely satisfied with the services that they have provided.

Completing year end 1099s and tax returns is also a monotonous, specialized task. Training a new employee in this field can be extremely costly and time consuming. Along with needing to understand the specific software involved, employees will also need to understand the specific tax forms and requirements, along with an array of confusing terms. It is also crucial that the information on these tax forms is completely accurate. When employing outsourced bookkeepers, they have the time and patience to look over everything to ensure that it is completely correct.

Many outsource bookkeepers also provide an array of other services to help save your company time, money, and frustration. To save money and provide your company with the necessary time to focus on more important business matters, consider employing outsource bookkeeping services.

About the Author Art Gib:
Outsourcing bookkeeping to an outside service provider who is an independent contractor is a better solution.