Keeping accurate financial records is important for small businesses for several reasons: 1) It allows owners to monitor the success and failures of the business, and analyze key financial metrics like profits, expenses, and sales. 2) Financial records provide the information needed to make important business decisions by showing the potential financial impacts. 3) Banks and investors require financial statements and records when seeking financing. 4) Financial records make tax filings easier and more accurate, and help ensure compliance with regulations.

1. Importance of Good Records
Small Business
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2. Are your receipts in a shoebox?
 Too busy to keep up with your
bookkeeping? Do you continually
analyze the success, failure, and
progress of your business?
 How liquid is your business? Does it
have enough current assets to meet
current debts? What is your turnover
for inventory? receivables?
 If you are going to run a successful
business, you must have accurate
and timely financial information.

3. This is YOUR business
Here are some of the
reasons why you need
a good financial record
keeping system:

4. Monitoring the success or failure of
your business
 It's hard to know how your business
is doing without a clear financial
picture. Am I making money? Are
sales increasing? Are expenses
increasing faster than sales? Which
expenses are too high based on my
level of sales? Do some appear to
be "out of control?"

5. Providing the information you need
to make decisions
 Evaluating the financial consequences
should be a part of every business
decision you make.
 Without accurate records and financial
information, it may be hard for you to
know the financial impact of a given
course of action. Will it pay to hire
another person? How much will another
employee cost? Is this particular product
profitable?

6. Obtaining bank financing
 A banker will usually want to see financial
statements: a balance sheet, income
statement, and cash flow budget for the
most current and prior years, as well as
your projected statements showing the
impact of the requested loan.
 A banker may even want to see some of
your bookkeeping procedures and
documents to verify whether you run your
business in a sound, professional manner.

7. Obtaining other sources of capital
 If your business has reached the point where you
need to take in a partner, any prospective partner
will want to become intimately familiar with your
financial picture.
 If you need capital and are thinking of taking in
an outside investor, you will need to produce a lot
of financial information. Even your suppliers and
other creditors may ask to see certain financial
records.
 Such information may be produced by your
outside accountant, but it is based on your day-
to-day recordkeeping.

8. Budgeting
 All businesses should use a budget for
planning purposes.
 A budget will help keep your business on
track by forecasting your cash needs and
helping you control expenditures.
 In addition, if you are seeking bank
financing or other sources of capital, a
banker or prospective investor will probably
want to see your budget as evidence that
your business is well planned and stable.
You must have solid financial information to
prepare a meaningful budget.

9. Preparing your income tax return
 Whether your business is a sole proprietorship,
partnership, or corporation, you must file an
income tax return and pay income taxes.
 With good records, preparing an accurate tax
return will be easier and you're more likely to
be able to do it on time.
 Poor records may result in your underpaying or
overpaying your taxes and/or filing late (and
paying penalties). If your accountant prepares
your income tax return, poor records will
almost certainly result in your paying higher
accounting fees.

10.  If your business is a partnership,
not only will you have to prepare a
partnership tax return, but
partnership return amounts will
pass directly to the tax return of
each partner. So your
recordkeeping will directly affect
the tax return of each partner.

11. Complying with federal and state
payroll tax rules.
 If you have employees, you are aware of
the myriad rules and regulations relating to
payroll taxes. Payroll tax deposits must be
made according to strict deadlines. Late
payment of payroll taxes results in severe,
and unnecessary, penalties.
 Also, you must file a payroll tax return
every quarter, which you must reconcile
with the payroll deposits made during the
quarter. Then at the end of the year, you
are required to give your employees and
the government W-2 forms, which must
agree with your quarterly payroll returns.

12.  Sound bookkeeping practices
will make compliance with all
these payroll rules easy. Poor
records will make it impossible.

13. Submitting sales taxes
 If you collect sales tax from your
customers, good records will make
it easy for you to compute the tax
due and prepare the required
reports.

14. Distributing 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 are operating as a corporation, you
must determine the company profits that
you will be paying out as dividends to the
shareholders.

15. Unless your business is accounting or
bookkeeping, keeping financial records
is probably not what you do best.
 You would rather spend your time
selling your product or service.
 To eliminate the stress, mishaps, and
potential errors in your financial
records, hire a bookkeeper to keep
your books!
 Drop off your receipts and financial
data every week, receive the monthly
statements and reports needed to
know how your business is doing.

16. Coleman & Company LLC
 Birmingham business consulting firm
Coleman & Company provides
business services for small and
medium-sized business throughout
Birmingham.
 We are your key to successful and
accurate bookkeeping in the Greater
Birmingham Area.

17. Contact Information
Phone Number
+923136476047
Email Address
bjwa764@gmail.com
Profile Link
http://www.peopleperhour.com/fre
elancer/hamid/professional-
accountant-bookkeeper/1016876