Keeping proper accounting records is very essential in every jurisdiction as you want to obey the laws that are in place. Below are listed five main reasons why one needs to keep accounting records of all your business dealings:
- It Keeps You Organized: Finances are a top key element of any enterprise and a company that does not know its complete financial picture because of issues in managing accounts will be deemed to be an unorganized company.
Therefore, you need to know about your money as it plays a very crucial role in the organization of your company. Keeping a well-accounted record will make your company organized and you will get a vivid picture of the status of the company dealings.
- Record Keeping Means Compliance With The Law: Good and proper record keeping is a very important legal requirement in almost every country and jurisdiction.
By keeping a proper accounting record of your company, you are staying within the law and can avoid penalties and interest by making it easier to pay the right tax at the right time.
- Filling Tax Return Becomes Easier and Saving Tax More Profound: by being organized and sorted you can include everything you are entitled to in any claim or return you want to make to the Tax authorities.
- Makes It Easier To Get A Bank Loan: it actually true, banks like it when you seek for a bank loan for all the right reasons and at the right time. If you are organized you need not wait until you need one to ask for it.
- Easier To Prepare Management Accounts: without proper management accounts, you are at a constant loss of where is all your money going? Management accounts will help you to keep a track of all the income and expenses.
They tell you about the performance of your business. With proper management accounts at your disposal, you can easily and conveniently compare one period with another, this year with the other years.
- Enables You To Efficiently Manage Your Business and Make It Grow: you are the best person who knows your business better than anyone. But reliable information can be extracted only from the records that you keep.
Thus, you need good financial records if you plan to grow and expand your business in future. By keeping accurate records you can plan your future business models and perspectives in sync with the money you will be requiring.
If you don’t have good records, it is much harder to arrive at informed decisions and make good choices.
- Enables Organized Dealings with the Suppliers and Customers: producing a track record of invoices, quotations and estimates promptly are very essential. It helps in an early estimate of the difference between losing and winning a job.
You should not rely on the supplier’s estimates or statements. You should be informed well in advance rather than getting informed from them, telling you how much you owe.
- Easier To Find Important Documents and Information Quickly: By being organized you can easily and quickly find the information regarding the original order of the goods or work supplied. It makes your work hassle free and convenient.
- It Assists Uou in Planning in Advance for Tax Payments and Other Liabilities: Tax Planning is something that everyone does. Setting money aside when you have the cash is a good option of staying robust.
- It Helps You in Checking Your Tax Position Accurately: Sometimes Tax Authorities do make mistakes. By staying organized you can keep a check on the accuracy of your tax position.
- Reduces Your Accountant’s Fees and Save Them Time and Energy: Keeping a proper accounting system will help you get extra value for your money. But keeping records untidy and berserk will eventually cost you more.
- It Corroborates Your Claims To Tax Reliefs or Capital Allowances: Capital Allowances are the provisions with the help of which you can save a lot of your tax when you buy equipment and similar assets. Being unorganized with a lot of paperwork can make you miss out on such crucial opportunities.
As you see, it is very important to keep good accounting records.
