The Surprising Role of Bookkeeping in Saving Your Bottom Line

The importance of bookkeeping in your business is really what I like to think of as the sleep test. When you know what's going on inside your business, there are no surprises that can come up.

So one of the things it does when we go through and we do reconciliations, is we keep up-to-date information. One thing it does is it helps us ensure what liabilities we have are very well matched and keeps us kept up to date for us so that we can see them and that we're not going to be surprised by something. So an example is one, if we are earning a lot of money inside our business, we know there are going to be tax liabilities.

We understand that whatever country we're in, specifically in North America, if we're earning taxable income inside our business, we can better prepare for what that tax liability looks like. So, for example, in Canada, as a small business corporation, a 12.2% corporate income tax rate, when we're looking at our financial reports, we can be estimating what that tax liability looks like.

Another example is any of our sales tax, whether it's GST, HST, or an applicable state sales tax, wherever it is that we're located in North America when we're tracking our sales and any of the respective expenses that we can get input tax credits from. It shows us exactly what those liabilities look like. The same goes for our payroll and source deductions. If we're paying employees or withholding income tax or any sort of pension contributions, it's going to be showing up there as a liability and shows how much we owe.

So, again, the importance of bookkeeping is to have this accurate information where we can see a true picture of what's happening in our business so that we can essentially sleep at night and know exactly what's coming down the pipe when it comes to any liabilities or any cash outflow that we have to make.

If you're ready to take your bookkeeping to the next level and want professional assistance, click the link below to visit our website to get in touch with our team. Whether you need help setting up a bookkeeping system, optimizing your financial processes, or ensuring compliance, our experts are here to provide you with the support you need.