Bookkeeping is an essential part of any business and often a task business owners avoid because it seems dull or time-consuming. However, it’s an area of your company that really shouldn’t be ignored and if it’s done right, it can be an easy, effective and profitable process.
Whether you choose to manage your own records or hire a bookkeeper or accountant to manage them for you, we’ve listed the reasons why keeping on top of your books is important for any sized establishment.
First of all, what is bookkeeping?
Bookkeeping is linked to accounting and is the process of recording all your financial transactions. These can include purchases, invoices, bills, expenses, payroll and benefits, no matter how big or small.
Why is bookkeeping important for businesses?
Not only is logging your financial income a legal requirement, but well-organised bookkeeping brings a lot of benefits to you and the growth of your company. This article dives a little deeper with our top 5 reasons for bookkeeping:
- Accurate budgeting
By tracking your monthly income and expenses, there’s a clear trail of how and where your money is moving. This helps organise your finances and provides neat records you can easily access or review. It also provides a good understanding of your available cash flow and where you could invest it.
- Tax preparation
Whether you’re a Sole Trader or a Limited Company, we all have to submit our tax returns at the end of the financial year – every year. Normally, this becomes a rushed and stressful job just before the deadline. Resulting in late nights or emergency charges for an accountant’s help. Regular bookkeeping stores everything you need ready to submit whilst reducing the risk of any fines. It also predicts your yearly income and therefore the amount of tax due, more precisely.
- Stay on top of your invoices
Bookkeeping records include your client invoices, so you can track exactly how much is being paid and when. With this clear picture, you’ll be able to quickly spot missing invoices or late payments, helping you prepare for any impact this may have on your outgoings.
- Helps with business growth
If you’re ever looking for financial support to grow your business, banks, brokers, lenders or investors will want to view your financial records. Poor bookkeeping will make it difficult for you to justify the investment and slow down the process. Whereas streamlined accounts will identify profitable areas and reassure your investors. Bookkeeping can also help create a financial roadmap for your business and support any major decision-making.
- Provides peace of mind
There’s nothing worse than sleepless nights worrying about your next paycheck or how you’re going to cover the bills. By managing your own bookkeeping, you thoroughly understand how your business is doing and where your money is. Furthermore, if a client questions an invoice, a supplier chases a bill or the HMRC gets in touch, you’ll be fully prepared to resolve the issue confidently and swiftly. Creating a smoother, more manageable business.
Speak to the experts
If you want to expand or protect your business, up-to-date bookkeeping records will help us find you the best financial option. Get in touch today for more information on how we can help you.
