After all this time it still amazes me that business owners don’t understand the importance of having good records. As often as I have run into it over the last 30+ years, it shouldn’t anymore. They usually hire a bookkeeper and a CPA to do their taxes and then forget about it.
The problem – it’s not enough. I truly believe that a business where the owner understands the importance of good numbers is one of the main things that separate successful businesses from those that fail.
So – let’s try again. The following are the main reasons that every business owner should make having accurate, timely financials a priority:
- Lack of adequate record keeping is a major cause of business failure.I
- If you don’t understand your numbers, you can’t manage them.
- Good accounting records provide the data needed for owner to make informed, data-driven decisions.
- Businesses with good accounting records are less likely to overpay their taxes.
- When your business is audited by the Feds or by the state, good records go a long way toward reducing your exposure to additional taxes and the resulting interest and penalties.
- Good financials allow the owner not to operate in a vacuum. They can spot trends much earlier.
- Good financials help the owner increase sales by spotting customers that reduce their sales and following up quickly to solve the problem and recover the customer.
- Good financials help prevent or detect fraud quickly.
- Companies with good records almost always make higher profits than a similar company that has poor records.
As important as having good records is, there really is no good excuse for not having good records. So, why don’t you?