Bookkeeping and Accounting can be boring, we know! Yet, it is an essential part of your business because it gives you clear information about the health of your business, your overall cash flow, how much money is truly available in your bank account for spending and who owes you money. Most business owners that manage their own accounting records usually update their accounting information on a monthly or quarterly basis, most accounting firms that offer outsource bookkeeping to small businesses usually offer weekly accounting records updates for their clients. Is that truly enough? At Polaris Tax & Accounting be don’t believe that weekly, monthly, or even worst quarterly updates are sufficient, and this article will show you why.
Better Bank Balances:
Bookkeeping and Accounting must be updated every day in order to give you a true view of your available funds in your bank account, the bank balance available when you sign in to your online banking is simply an illusion. Without real-time Bookkeeping and Accounting your business cannot take into account outstanding checks that might affect your bank balance which the bank has not yet processed. Say for example your bank account balance shows a balance of $ 10,000 yet, you just wrote five checks to your employees for your latest payroll, and you have that nice recurrent Rent payment through bill pay automatically initiated by your bank. Is your bank balance still $ 10,000? No, the true amount available in your bank is $ 10,000 minus any outstanding checks. Our cloud accounting software Xero does a wonderful job at tracking both the bank balance and your true available balance, but this can only be effective if you use real-time bookkeeping and accounting.
Better Cash Flow:
Bookkeeping and Accounting on a real-time basis also offers you a greater level of information than if you updated your books sporadically, you will have greater insight into your business performance by knowing you can generate a Financial Statement like a Profit & Loss in the middle of the month with real updated information. This is crucial to help you better understand cash flow, and predict how much cash is needed for ongoing expenses you might have by the end of the month. Without real-time bookkeeping and accounting, you cannot gain a true perspective of your cash needs.
Better Tax Planning:
Bookkeeping and Accounting is essential in order to prepare a tax return however, if you want to save tax dollars you must implement tax mitigation strategies before the end of the year. Proactive accounting firms like Polaris use real-time Bookkeeping and Accounting to help us become more proactive and better tax planners for our clients, giving us real-time information about your business so that we can offer tax reduction strategies during the year. With real-time Bookkeeping and Accounting, we also can better prepare clients for upcoming tax liabilities by running more accurate tax projections during the year.
Because of these benefits, our firm is committed to keeping our clients’ financial records every day, because real-time Bookkeeping and Accounting is essential to help you manage your business more effectively, gain a better understanding of your cash flow, and implement tax reduction strategies before tax season rolls around. This is the major difference between a reactive accounting firm and a proactive one that believes in real-time Bookkeeping and Accounting.
