Importance of Keeping Good Business Records

Posted on Feb 12, 2014 | 0 comments

When starting a new business many of the small business owners does not gives much thought to their accounting system. They actually do not think about it at all. They just think how to run the business and how they can make good money. Many of the small businesses fail due to the poor financial records. It is very much important to keep timely and accurate records of the business. For keeping good business records it is very important for you to know that how your business is doing. You should see that the business which you are doing is making good money or not. You should also see that are you charging enough for the services and products and are the expenses out of our control. Many of the owners of small business have no idea that how their business is really doing.

Because there is cash in their bank they might then think that their business is doing well but it is not a good assumption. If you are making any bad financial decision and you do not realize it before the time then it may be too late to recover from the mistakes that you make.Another reason for keeping good business records is that it helps you to know that whether you are pricing your service or product accurately or not. To

determine the correct price to charge for your services or products is one of the most important decisions that you can make for your business. If you are charging too much then you might lose business to your competitors and if you are charging too little then you are pricing yourself right out of the business.
You should be sure enough that the price of your services or products is high enough to cover all of your costs which include the costs that might not directly go in to your product, such as insurance, supplies, loan costs and others.

If you will be applying for a business loan then you will have to supply a financial statement so that the bank can be able to determine if you will be able to pay back the loan or not. If you are taking time to update your financial records before applying the loan then you could miss on a good financing terms or a business opportunity. It is very important to have a good business records while you are preparing for your tax return.

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