Can Good Record Keeping Make You Rich?

What if I told you that managing your finances more efficiently could make you rich? Would you be interested in learning how to effectively manage your finances? Something tells me you would be. You see, the thing is… many would assume that in order to get rich you need to acquire more money. While that is a portion of the equation, the other part of becoming financially successful and staying that way is – financial management.

Accountants and Financial Management

Unless you’ve majored in accounting yourself, to effectively manage your finances it is ideal to work with a certified public accountant. Kansas City CPA firm MarksNelson points out that the right accounting firm will work with you to help safeguard and grow your business.

Consulting with an accountant on a periodic basis to set up accounting systems, make major purchasing or investment decisions, evaluate existing accounting systems for errors, and assistance with business tax filing is an investment worth making. It essentially helps you to keep your finances in order, which can certainly lead to a financial increase.

The Importance of Good Bookkeeping

Do you know what money you have coming in and out on any given day? Do you know how much of that money you’re spending on operational costs, investments, or savings? Whether your business brings in $30,000 a year or $100,000 a year if you’re not tracking your expenses, chances are you’re allowing money to go down the drain.

The mismanagement of funds can quickly start a domino effect. It will hinder your ability to purchase inventory, pay salaries, make investments, and even provide quality customer service. In a nutshell, poor bookkeeping can quickly lead to the demise of your organization.

Benefits of Good Bookkeeping

Let’s take a look at some of the ways effective bookkeeping can increase company profits and bring you closer to being rich.

1.  Better Financial Analysis – You can’t make a decision on purchases, hires, investments, or savings if you don’t have a clear understanding of how much money you have (cash flow). Ideally, with the right accounting system in place, you can clearly see where money is coming in and going out each month.

2.  Fulfill Tax Obligations – As a business owner, you’re responsible for paying a lot more taxes than you would if you worked for someone else. Proper financial records make it easier for you to remain in compliance with tax obligations. Keeping track of cash flow, account balances, profits and losses makes it a lot easier to file your taxes every year. It ensures that you’ve paid the correct amount, which can prevent you from receiving hefty fines from the local and federal government. Good records can also help you in taking advantage of the many tax benefits there are out there for small businesses, which of course saves you money.

3.  Prevents You From Going Into Debt – If you’re blindly making purchasing decisions or taking out lines of credit and loans that you can’t afford to pay back, you’re going to find yourself in debt. Quality financial management, however, can help you stay out of debt (or at the very least manage the debt you have). If you have a clear understanding of what you have and what you can afford you will make more effective decisions as it pertains to purchases and borrowing money. Accurately recording company debt can also ensure that you stay on track with payments so you don’t incur more fees or damage your company credit.

4.  Informed Purchasing Decisions – You have to be willing to spend money to make money in the world of business, but if you’re spending more than you’re making – it’s a waste of time. Bookkeeping ultimately helps you to see the bigger picture as it pertains to your company finances. Having a budget for instance lets you know how much you have to spend on necessary expenditures so that you don’t go overboard.

So… you may have caught on to the fact that bookkeeping won’t make your company rich. HOWEVER, it will help you to utilize your money more wisely and can assist you in saving hundreds if not thousands of dollars every year. Think about it… if you had an accounting system in place that allows you to manage cash flow, make more informed purchasing decisions, maintain your tax obligations, AND helps you to take advantage of deductions and credits… you’ll have more money to invest into your business so that you can ultimately meet your financial goals.

1 thought on “Can Good Record Keeping Make You Rich?

  1. deleteing my rss feed for this blog now. thanks
    I don’t need to read canned yahoo finance posts. bye

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