5 Reasons a Good Bookkeeping Process Can Boost Your Business
Our accounting partner explains best practices for bookkeeping..
This is an absolutely fundamental part of the accounting process, and must always be done properly, or else your figures, and in turn your business, may suffer. With that in mind, we have developed this guide into good bookkeeping, and just how it can help to boost your business. Let’s take a look..
What is Good Bookkeeping?
To understand what makes a good bookkeeping process, let’s first dig a little deeper into just what bookkeeping is. In a nutshell, this process consists of recording and organising your financial figures, and constantly keeping these up to date as money comes in and goes out.
Every financial transaction needs to be marked down and recorded in a place which is easy to read and locate if needed. That is bookkeeping, so what makes it good?
To be a great system, you need to be accurate. This is essential as if your figures are wrong, it can cause huge issues when it comes to your accounts. You also have to have the data stored in a way that is easily accessible and where it can be clearly viewed when needed.
Not only that, but having a process which allows you to keep things up to date, consistent, and always professional is also important. Good bookkeeping isn’t easy, but there are many benefits to when it is done well, including these five.
5 Ways a Good Bookkeeping Process Can Help Your Business
Better Compliance with Tax Laws
Staying up to date with tax compliance measures and any other laws is essential when doing company accounts. Good bookkeeping allows you to always be on top of your finances and keep accurate records.
This means when it comes to completing tax returns, you won’t be submitting anything that is incorrect and that may land you in trouble. There can be penalties if you don’t fill in your finances correctly, so having a system you trust and that can showcase any information needed quickly helps to make sure your accounts are always just right.
Enhanced Planning & Decision Making
Having financial figures that are up to date is essential when making big decisions. If you can see that your balance is looking healthy, you may feel more emboldened to make some changes. Alternatively, if you notice your figures starting to look a bit low, it may be time to look to resolve this issue and get things back on the up.
These figures will also help you evaluate some decisions and see how some actions, like changing product price for example, has affected cashflow. It can also make it easy to spot areas that are performing well and some that aren’t, and allow you to react and capitalise on this information.
Strengthen Your Brand Position and Reputation
Many investors and stakeholders may want up to date information on just how your business is running. If you have financial figures on hand that you can showcase, and they can see a professional job is being done and care is being taken over the accuracy of this data, then this is sure to impress.
Investors are much more likely to believe in a business where they can see its progress over time. Not only that, but showing a solid financial foundation is a great way to build trust. This is where accessibility comes into play, and making sure your figures are readable, clear, and concise, is key to presenting these to internal and external figures who may need them to help make a decision that could benefit your business.
Improved Control of Your Finances
This one is a simple one, but good bookkeeping means you have a grip of your finances. Always been in the know is invaluable when it comes to your cashflow. If you don’t know how much money you have in the bank, and continue to spend, you can soon find yourself in trouble when you run out of cash.
If you can be sure your data is accurate and up to date, then you will be able to avoid issues such as overspending and bad decisions. It will also give you peace of mind knowing that you have a clear idea of how much money you have in reserve, and how much you have that you are able to spend.
More Efficient Control of Finance
One final benefit is that it can make things much more efficient. If in the past you have failed to perform bookkeeping correctly, you may have been one of the people scrambling through old receipts in order to get your accounts right at the end of the financial year.
This isn’t fun and can take a lot of time and manpower. If you keep your finances up to date, then everything is already uploaded, meaning when it comes time to submit your tax returns and more, all the information is already there. By regularly updating your figures, it also means you don’t lose days doing it in one go after you realise you’re running behind.
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