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Why Accurate Bookkeeping Matters
Do you struggle to keep up with your business bookkeeping? If so, you’re not alone – it’s a more common problem than you might think – but it could be doing you real damage. These are just some of the reasons why good bookkeeping really matters.
Meet reporting requirements
The first thing that springs to mind for most people when they think about bookkeeping is the importance of regulatory compliance and regular reporting. It’s much easier to manage this if you keep diligent records on a day to day basis, rather than rushing around trying to patch together a paper trail at the last minute.
If you’re audited by the tax office, having good records will make the process much less stressful, and if you get your accounts independently checked at the end of each financial year, the fee is likely to be lower.
Identify savings opportunities
Well-kept books will give you a clear overview of where the money is being spent within your organization, helping you to identify ways that you can cut down your costs.
Noted that a lot of businesses lose money due to poor cash management, and close scrutiny of accounts often reveals other issues such as chronic undercharging or paying over the odds for materials.
Make better decisions
When you have a clearer idea of what’s being spent and where in your business, it’s much easier to respond quickly to emerging opportunities because you’ll find it much simpler to keep track of your company’s financial health. You’ll be able to approach planning from a position of greater confidence, and this will make everybody in your organization feel more secure. You’ll know which areas of your business most need investment and support.
Don’t miss out on tax breaks
Is your business paying more tax than it needs? If you haven’t been keeping close track of the books, the answer is almost certainly yes. You should be tracking expenses to work out what you can claim back against tax.
Doing this day-to-day and familiarizing yourself with the rules means you may be able to restructure the way you do business so as to reduce your tax bill. It will also make it easier to keep track of changing rules and to make sure you don’t bank on something that no longer applies.
Accurate Bookkeeping: avoid accidental overspend
Because careful bookkeeping means you’ll be more aware of your cash flow, your margins, and how much you have in liquid assets, you’ll be much less vulnerable to spending beyond your means. Exercising tighter control means you’ll be less likely to need to take out unplanned loans, which will further reduce your expenditure because you won’t need to deal with high-interest rates.
With all these considerations in mind, perhaps bookkeeping won’t feel like such a chore in the future. It’s at the heart of keeping your business healthy and when you get it right, you’ll find that many of your day-to-day troubles melt away.