The answer to this question is YES - it is Absolutely Necessary!
And for all the business owners who are asking this question, or even worse, ignore it by saying "I am making money, I can see my bank account, so I don't need it, right? WRONG!
The regular bookkeeping is an essential activity for your business. I do stress MONTHLY Bookkeeping with all my clients. Here are some benefits of following this routine:
Financial Health Monitoring - monthly tracking of your cash inflows and outflows ensures that your business has enough resources for it's obligations, you can recognize patterns and predict expenses to maintain adequate balance in your account. Also, reviewing monthly income and expenses will allow you to adjust your margins.
Make inform decisions - stop guessing and learn from what happens inside of your business. But how can you tell what is happening to your cost, margins, profit or revenue level without looking at accurate, and regularly updated financials? The answer is - you can't!
Tax compliance - Accurate tax filing requires Balance Sheet and Profit and Loss Reports that are accurate, and completed. When you bring messy financials to your accountant and you expect him or her to finish your tax return right away, you will get either completed tax return based on the numbers you provided (Messy books=inaccurate tax return), or the tax preparer will file for the extension to buy some time to finish and clean your books. Either way you are subject to late payment penalties, or other fines that will result with potential audit in the future.
Need a new loan ? - well the bank will definitely ask you for the set of reports that tell the accurate story about your business.
Do you want to avoid fraud and control your financials ? - Lack of accurate reporting, or reconciled bank accounts will allow others to take full advantage of your resources without you even noticing it for a long time.
So ask yourself if any of the above would motivate you to maintain clean set of books.
When you are concern about your ability to do it yourself, or just a thought of working with QuickBooks makes you scream, give us a call. We are here to help. After all, your job is to focus on delivering the best services for your clients, our job is to make sure, you can grow your business, and to maintain full compliance with the IRS.
Thank you!
Peter.