Maintaining accurate business records can seem like a burden if you are trying to grow your business but when it comes to strategizing long term growth, bookkeeping is vital and may turn out to be a winning or losing factor for your business. Period.
Bookkeeping is the practice of maintaining various accounting and financial documents of a business such as ledgers, journals, financial statements, income tax records and more.
Also keeping accurate financial records is a legal requirement of any business and poorly kept or improper data can impose heavy penalties from the HMRC, which you certainly want to avoid at all costs!
Here are some other reasons why you really should record all your monetary business activities accurately –
Check if you are in Profit
The main motive of running any business is to earn profits! But how do you know if you are running your business in profit or not when you have no record of transactions to keep track of? By maintaining good records, you can tell where your business stands at a point of time by just having a glimpse at your financial statements and then based on your financial status, you can then make effective and informed business decisions and plans.
Makes filing your tax returns a lot easier
When you have accurate business financial statements at your disposal, filing for tax returns become a lot easier. This is probably the most important reason to keep accurate financial records. You need to be able to ascertain the exact amount your business earned last year and how much tax you need to pay to the government which in the absence of accurate financial records, can be more of a headache and have some serious repercussions which you definitely want to avoid!
Know your revenues
If you are in the business sphere, you must be aware of the 80/20 rule – 80% of your profits come from only 20% of your customers. When you are accurately up to date with your financial records knowing which vendor has resulted in the most profits, you can focus on them more and further strengthen your relationship with them, eventually resulting in more business revenues and profits.
Figuring out the available cash-in-hand is important for the day to day running of your business and accurate bookkeeping can help you keep a track of it at any point of time.
Many businesses who have a knack for improper bookkeeping seize to exist when faced with a major cash flow crisis and having an accurate idea of the regular cash flow of your business by maintaining proper financial records can help you evade this problem.
Save yourself from trouble from HMRC by maintaining proper accounting and financial records of your business transactions. If you are looking to avail impeccable Accounting Services in Denver, we can help!