Lately, I have been holding conversations with prospective clients and others interested in what services we offer their Indianapolis business’. While I believed that the need for bookkeeping was obvious, I have been finding that there are individuals, who run their own business or know someone who does, that do not understand the importance of bookkeeping. I have spoken with prospective clients, as well as business owners that I know personally, who have told me that they do not need to perform bookkeeping services, or do not understand why they would.
The Case for Quality Bookkeeping Services
Quality bookkeeping is important to all businesses for a myriad of reasons: tax reporting, evaluating business performance, and validating or verifying business activity. Proper bookkeeping for your Indianapolis business will provide efficient access to information for the owner or their administrative staff, help them to make effective decisions related to the business, and understand the impacts of any decisions they make currently.
In regards to tax reporting, tax filing is required for all individuals and businesses of virtually any setup. I have had some individuals express that they believe the only purpose of bookkeeping from a tax reporting perspective is to report to the IRS anything that you earn, what some individuals fail to understand, is that an essential part of tax reporting is offsetting your earnings by what you spend on money-making activities. That’s right, expenses you incur to conduct money-making activities can offset the business’ income to reduce your overall tax liability. Bookkeeping is important to this because there are some items that require special attention, for example, depreciation. Depending on your overall cost of equipment, the type of equipment, and your business’ money-making activity, you can deduct some of the cost of equipment to help offset your income. This is only a small element related to tax reporting, but quality bookkeeping can help you with year-end tax filing, as well as your required estimated tax payments.
Why Your Indianapolis Business Needs Our Bookkeeping Services
When evaluating business performance, quality bookkeeping can make this easier. Using an effective method to track expenses, income, and all business activity in between will improve your ability to understand the current state of your business. An Indianapolis business owner will perform these types of evaluations to ensure they have a clear understanding of the performance of their business. They will monitor things like cash flow, job efficiency, profit and loss for all or individual activity, and also understand how their overhead impacts their operations. Having a clear and effective bookkeeping process ensures that you can locate more easily, those transactions that impact specific elements of your business. Tracking your Cost of Goods Sold is helpful in understanding what elements are deductible from income, but also to show you profit margins on goods or services that you sell.
Indianapolis Bookkeeping Services – Auditing
Auditing business activity is beyond important for all Indianapolis companies. When conducting our bookkeeping services, all business activity will ultimately be tracked and recorded. This includes expenses, income, and really anything operational. We have already covered why bookkeeping is important from a tax perspective and for understanding the performance of the business, but it is also important to verify activity that occurs within the business. Consider from a personal perspective, have you ever wondered if you forgot to pay a bill? Have you ever accidentally allocated money to one expense when it should go to another? How about a potentially more common one, have you ever misplaced any cash? These questions are connected to the verification of business activity. Quality bookkeeping services ensure you are tracking payments and income, verifying that checks written, or ACH payments made, have been received by their intended recipient. If you are a cash-based business, this is important for auditing cash register deposits and cash receipts. Ensuring that money is going where it should, and if you have employees, that you are tracking any income or expenses they are responsible for. Validation of business activity may also help you locate potentially needed efficiencies in operations.
Learn More About Our Bookkeeping Services Today!
While bookkeeping can be tedious work, it is vastly important to operate a business, whether small, medium, or large, and essential to proper financial reporting. We can really dive deeper into each of these topics and take a closer look at their importance to a business, but it is possible to dive too far into a topic that is not relevant to all business types. This really brings us to the final importance of understanding accounting methods, and specific accounting and bookkeeping rules for your setup of the business. Understanding these subtle differences is important to effectively operating your Indianapolis business, and complying with IRS and Department of Labor requirements.