What Bookkeeping Tells You About Your Business Health

What bookkeeping tells you about your business health by Benchmark Ledger Solutions

Have you wondered what bookkeeping can tell you about your business? Your daily bookkeeping and reconciliation is to ensure all your bookkeeping records are accurate, but what can you actually learn from the information you gather?

In this article, we will be explaining some of the main information provided by your bookkeeping service and why it’s crucial to your business’s operations.

Profitability

Most bookkeeping advisory services will provide clients with a profit and loss report, which includes almost everything that a bookkeeper would have recorded for the business. On the profit and loss report provided by your outsourced bookkeeping services, or from your own bookkeeping, you will have all the income and expenses in that designated period. Subtracting your business expenses from your business income shows your net profit. If this number is ever negative, it means the business has lost money for that period of time.

Something to keep in mind when reading a profit and loss statement, just because the business was not profitable for that statement, it does not mean the business is not profitable. For example, if your profit and loss statement for December 2025 was showing a negative net profit, but this was because the business paid 2026’s full-year rent in one lump sum, and the business uses cash basis accounting.

Tax Dues

Bookkeepers keep accurate records of business expenses, including which category they should be taxed at, and can usually provide you with an estimate of your federal, state, and city taxes. During tax season, when you visit a CPA to file your taxes, they will also need your bookkeeping records to help you file your taxes, and it will be based on the information your business provided to the bookkeeper, which they input into your bookkeeping system. 

Without proper bookkeeping, when it comes time to pay taxes, it takes a lot of time, energy, headaches, and cost. For example, if you made a purchase for the business in January 2025, and you are working with your CPA to file taxes in February 2026, it is going to be extremely difficult, if possible at all, to fix the mistake that was made. Benchmark Ledger Solutions reconciles client accounts against their bookkeeping records regularly; for this reason, most record-keeping issues are much easier to solve when caught early.

Compliance

Bookkeepers are very helpful in ensuring your business is following the proper regulations when categorising expenses to stay in compliance, and inform you when there are potential issues. Although CPAs and tax preparers can do this, having a bookkeeper who tracks, categorises, and reconciles your transactions on a weekly or monthly basis means issues are caught when they happen. Catching problems before they snowball can save your business money, time, and legal troubles in the future.

A collective grievance of small business owners is “there are no bookkeeping services near me” or “bookkeeping and financial reporting for small businesses are too expensive”. And this can be true since a lot of small business bookkeeping services still charge the same amount as their corporate bookkeeping counterparts, or don’t offer bookkeeping for nonprofits. Utilising a virtual bookkeeping service for small businesses like Benchmark Ledger Solutions is a great way to save on costs and not be limited by geographical location.

Growth

Although bookkeeping in itself cannot usually help your business grow, it can provide you with the information necessary to make smart, informed decisions about your business’s growth. Financial reports provided by bookkeepers on a monthly and annual basis are important in having a clear understanding of your business and how it is operating from a bird’s-eye view. 

Benchmark Ledger Solutions offers services in every stage, from catch-up bookkeeping services, key performance indicator tracking, benchmarking against other local and national businesses, and much more, all without requiring a physical location. Beyond your business advisor, there are many cases you would need to present your financial reports, for example, if you are receiving loans and grants, they likely will require your financial statements to make a judgment on your business’s potential and risk.