The Importance of Keeping the Books

If you’re running a business, don’t underestimate the importance of bookkeeping and accounting. Many companies have found themselves in trouble with the law after failing to keep accurate records of their income and expenditure. There are many other good reasons for taking bookkeeping seriously. It’s important not to bury your head in the sand when it comes to paperwork, as the more you do so, the bigger the problems you might face in future become.

Bookkeeping cat on the job
photo credit: Xavier B / Flickr

Help your business grow

One of the biggest advantages of bookkeeping is that it allows you to grow your business. By examining how much money you’ve been generating and the cash you’ve been spending to keep your business going, you can make informed decisions that you hopefully won’t come to regret later on. Most people who run businesses need to deal with an array of suppliers and customers. Keep accurate records of what you owe and what’s owed to you and you should be able to avoid overspending.

Don’t throw relevant documents away

Keeping your records organised will also help you when it comes to disputes. If someone claims the amount on your invoice is incorrect, you’ll be able to look up the information quickly to see if they are right. Investors are more likely to get on board when they can see the state of your finances quickly and easily. Keeping accurate records means you are running your business in a professional manner, which also means the banks are more likely to help you if you do need to borrow money. Bookkeeping also helps you plan for tax and various other liabilities. The more adept you become at tax planning, the easier it will be to set the right amount aside for later. The authorities can mistakes, but your accurate records will again help you to clear up disputes.

Do you need help from outside?

It can be wise to outsource your bookkeeping to a external service if you don’t feel you’re good with numbers and would rather get someone else to oversee your accounts so you can focus on your core duties. Bookkeepers can often identify ways to save money and cut down your tax bill that many people don’t know about. The more efficient you are at keeping records, the less daunting completing your tax return will be. Update your records as money comes in and goes out of your business and you won’t find yourself dreading the tax return deadlines. If you can file your tax return on time, you’ll be able to avoid various penalties and interest. Keep a receipt for everything you buy related to your business so you can claim tax relief against it. If you fail to comply with what the law expects of you, you could be storing up huge problems for later on.

Keeping your bank happy

If you have borrowed money from a bank, they may ask to see reports on a monthly basis. They will want evidence that you’re managing your business effectively. If you can comply with their requests, you’ll be able to avoid breaking the rules and hopefully be permitted to borrow again in future. There are many accurate resources online that can help you if you need to learn more about bookkeeping for business owners. Do make sure you’re reading information relevant to the country or state you’re based in.

Enhance your business flow

Bookkeeping can vastly improve your business flow. There are many book-keeping courses you could take to help you get to grips with the books, though it may well be worthwhile to ask someone else to oversee them for you. Outsourcing your books to a bookkeeper could save you a great deal of time, freeing you up to focus on your core duties safe in the knowledge that everything is being handled by experienced experts in the background. If your business is taking up a great deal of your time and trying to keep up with the books is hampering your progress, it could be wise to start looking for a freelance bookkeeper. Not maintaining your books properly can lead to big problems, and could even jeopardise the viability of your business.

This article was provided on behalf of the International Association of Book-keepers an award winning and government-approved statutory supervisory body. The International Association of Book-keepers makes it easy for small businesses to find a bookkeeper online and have peace of mind that payroll will be managed efficiently by a regulated IAB bookkeeper. For more information visit the IAB website.