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The Importance of Bookkeeping For Small Businesses

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November 30, 2010
by Lacy Sereduk

Sure, it’s important when you’re balancing your checkbook but why else is this imperative for the entrepreneur and small business owner?

Let’s say you run a home based business either as an entrepreneur or as a direct sales distributor.  You have clients that provide you income for your bank account but how well are you keeping track of what is going out of your account?

As an entrepreneur, accurate and intimate bookkeeping can prove invaluable.  Not just at tax time or to save you from overdraft charges either.  You want to document all of your purchases that can potentially be written off at the end of the year.  Receipts from stores will usually lose their ink before the end of the year so a best practice is to copy them and keep an electronic file.

When you decide it’s time to do your budgeting, you’ll have a really good idea of just how much disposable income you’ll have at the end of the year because you’ve been keeping track of your expenses.  It’s not as easy the first year as it will be in subsequent years but accurate bookkeeping can prove better than a financial business plan.

Even if you don’t plan to write off these expenses at the end of the year, this style of bookkeeping can come in handy if you need a loan or decide to buy a house.  Entrepreneurs and distributors don’t have the opportunity to take in pay stubs or W-2’s from their employer.  At most, you may have a few 1099’s but that won’t account for all your income.

The best thing for an entrepreneur to do is buy, find, or create a bookkeeping system to track all their debits and credits.  This also helps keep your business or personal checking account in line.  In a few steps, you can view reporting that will show you when your most profitable months are when your most expenses occur.

Even if your a distributor for a direct sales organization, accurate and in depth bookkeeping can prove essential to your success.  And, in the end, you will have better logistics on just how profitable your latest home based opportunity really is.

I highly recommend creating your own bookkeeping program with MS Access (it isn’t too hard using the built in wizards) and even MS Word and Works have built in templates for basic tracking.  You can try out these free programs as well: Bean Counter, Outright, DES, or Home Bookkeeping 5.1.

NetworkingStar.com does not endorse or support nor is it affiliated with any programs, softwares, or recommendations.

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