The fourth reason is so that you can monitor where all of your income streams are coming from and MAKE SURE you get paid. This practice will also allow you to write off any business expenses against the taxable income we mentioned above. This will allow you to notice trends and analyze whether or not certain purchases will be worth it in the future. The third reason to remain organized is to be able to accurately see all of your business expenses for the year. The government will always want its fair share. This means, you still have taxes you will need to pay.ĭue to this, I like to keep a very close eye on my revenue so that I know exactly how much to save in a bank account for tax day.
What I mean by this is that typically in a small business, you are responsible for reporting your earnings to the IRS. The second reason to remain organized is so that you can have an accurate representation of your earnings for Uncle Sam. Therefore, being very organized when it comes to revenue and expenses allows me to see just how profitable my website is, and adjust the time I'm putting into it. I want to make sure that every second of my time, everything I buy, and everything I do is driving ROI in some way. The first reason is that you'll want to track your finances as closely as you can so that you can determine whether or not your business is driving a profit.Įverything I do here at The Financial Cookbook is about ROI (return on investment). To Determine if Your Business is Profitable It is so extremely important for tax reasons and to determine your profitability, but let's dive into exactly why you should track your revenue to a T. There are many reasons to stay financially organized when running a small business. Importance of Financial Organization in a Small Business
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