#1 It is hard to know how your business is doing without a clear financial picture. A good financial system provides answers to the questions: Am I making money? Are sales increasing? How do expenditures compare to sales?
#2 It helps provide the Information to evaluate financial consequences. Without accurate records and financial information, it's difficult to forecast the impact of any given course of action. Accurate records reveal the profitability of any line item.
#3 The best time to seek financing is when you don't need it. Always be prepared when the bank wants to see your income statement, balance sheet and tax returns for the most current and prior years, as well as projected statements showing the impact of the requested loan.
#4 Your business must file an income tax return and pay income taxes. With good records, preparing an accurate tax return will be easier and filing will more likely be done on time and with cost savings.
#5 Payroll taxes have strict guidelines. Sound bookkeeping practices, even if you use a payroll processor, will make compliance with payroll rules easy.
#6 If you collect sales tax, good records make it easy for you to compute the tax due and prepare the required reports. Again good bookkeeping can guarantee compliance and save you penalties and interest.
#7 If you have investors or partners, you will need good records to determine the correct profits to be shared or distributed.