Vital Function, for Every Business

A vital function of every business, regardless of size, is bookkeeping.  Without accurate records, it is impossible to know if the business is making or losing money.  Timely financial statements provide the tools needed to manage the business, with important information about cash flow, revenues, and expenses.

Another bookkeeping function is the preparation of required governmental filings – payroll returns, sales tax returns, business personal property tax returns, forms 1099, income tax returns; the filing requirements can be extensive depending on the type of business. All of these filings depend on complete and accurate books and records.

Timely financial information is only possible if you devote time each week to posting deposits, writing and recording checks, and invoicing your clients.  Each month you must reconcile your bank accounts and your credit cards.  If you are not operating on the cash basis, there are likely journal entries required each month to accrue things like profit sharing or to expense things like prepaid insurance.  If you have a loan, the lender will likely require periodic financial statements which can only be accurately produced if all these tasks have been completed.  And regardless of any other need for accurate financial records, annually you must file an income tax return for your business.

Yes, you can wait and catch-up your books just before you give them to your tax preparer (or have your preparer catch them up for you prior to preparing the return), but then your books are only a well-after-the-fact tax compliance tool.  They have done nothing to help you successfully run your business.  You spend the same amount of time and/or money doing concurrent or after year-end bookkeeping.  Why not leverage the value of that expense by actually using your books to help run your business?

Susan Clifford CPA Savannah Hancock AskewBy: Susan Corderman Clifford, CPA