Why keeping your books up to date can pay off

Keeping your books up to date isn't just about being ready for tax time.

Current books can help you answer questions about your business throughout the year: What are you actually making? Where is your money going? Can you afford to hire some help, spend more on marketing or start paying yourself more consistently?

When your bookkeeping is months behind, those questions are harder to answer with confidence.

Keeping your books current gives you better information to work with—and that can pay off in ways that have very little to do with tax time.

Know what your business is actually making

It's easy to look at sales and think you know how the business is doing.

But higher sales don't necessarily mean you're making more money. If your expenses have gone up at the same time, you may be keeping less of that revenue than you think.

Keeping your books up to date lets you see your income and expenses together. You can see what the business earned after the costs of running it instead of judging how you're doing by the money coming in.

Keep a better eye on your cash flow

A profitable business can still run into trouble if it doesn't have enough cash available when bills are due.

Keeping your books current helps you see the money coming into and going out of the business. You can get a better sense of whether cash is building up, getting tighter or simply moving differently than you expected.

That matters because the amount sitting in your bank account today doesn't tell you the whole story. Some of that money may already be needed for upcoming expenses, taxes or other obligations.

Make better business decisions

If your books are three or six months behind, you're missing information when you make decisions about the business.

You might have plenty of cash in the bank but also have expenses coming up that aren't obvious from looking at the balance. Or sales might be up while your costs have gone up even faster.

Current books give you a more complete picture to work from when you're deciding whether to spend, save or change something in the business.

Say your yoga classes are filling up so quickly that you've started a waitlist. You're thinking about hiring another yoga instructor so you can offer more classes. But can the business afford it?

With up-to-date books, you can look at what the business has actually been earning and spending before you decide.

See where your money is going

Business expenses have a way of adding up quietly.

A few software subscriptions, payment processing fees, advertising and other recurring costs might not look like much on their own. Over time, they can take a bigger chunk out of your revenue than you realize.

Keeping your books current makes those expenses easier to see. You can spot where you're spending more than you used to, find costs you may have forgotten about and decide whether you're still getting enough value from them.

You may look at the numbers and decide every expense is worth keeping. Or you might spot something you're paying for that the business no longer needs. Either way, you can make that decision knowing what you're actually spending.

Catch bookkeeping problems before they pile up

A transaction you don't recognize is much easier to figure out when it happened last week than six months ago.

The same goes for a missing receipt, a duplicate transaction or a payment that doesn't match what landed in your bank account.

Keeping your books up to date means those questions come up regularly instead of accumulating for months. You can deal with them while you still remember what happened and have a better chance of finding whatever information is missing.

It also means one small bookkeeping problem is less likely to turn into a much bigger cleanup later.

Make tax time less of a scramble

If you leave your bookkeeping until tax time, you're also leaving yourself months of transactions, receipts and unanswered questions to sort through at once.

Keeping your books up to date means much of that work has already been done by tax time. Your income and expenses have been recorded, questions about transactions have been dealt with and your financial records are in better shape to hand over to your accountant or tax preparer. 

Good records also help support the income and expenses you report to the Canada Revenue Agency (CRA).

It all adds up to a clearer view of where your business stands

Keeping your books up to date gives you a clearer picture of what the business can support next.

Maybe you can finally start paying yourself more consistently. You might realize you can afford to take Fridays off, turn down the clients you don't enjoy working with or take four weeks off in the summer without worrying.

Keeping your books current gives you something concrete to plan from. Instead of guessing what the business can afford to make possible, you have a much better idea of where you stand—and what you can do next.

Want a clearer picture of where your business stands each month? 

Keep your books current with a fixed-price monthly bookkeeping package—month to month, cancel any time before your next billing date.