Why do Businesses Need Accurate Bookkeeping?
Why Is bookkeeping important?
We all probably have some idea of what bookkeeping is and why it’s important, but it’s frequently overlooked and this can damage and unravel a business, particularly when it’s just starting out. The grim realisation that you have no idea what is going on with your business’s finances is worth avoiding at all costs! It’s tough to retrospectively fix bookkeeping issues and much simpler to maintain the books properly from the get-go - it’s time to develop a bookkeeping habit that works for you and keep it that way!
Find out where you are
Where is your business? Are you on or off track? What are your finances like? It’s a simple and pertinent question that bookkeeping can answer with crystal-clear clarity. Without proper bookkeeping, you’re working on mere instinct and incline alone. Of course, instinct is a valuable business quality, but when it comes to the books, you can’t leave anything to chance. By taking accurate books, you can assess your business finances at any point. You’ll be able to track payments and query when or where they were made, and by who. Incomings and outgoings will be easy to look up assess for any given period, e.g. daily, weekly, monthly, or for the whole year. The peace of mind brought about by good bookkeeping really can’t be underrated!
Find out where you’re going
Bookkeeping works for the past, present, and future. Tracking changes over time is much simplified with proper bookkeeping and bookkeeping software makes it even easier to open up and view valuable insights about your business over time. This can help you plan for the future and manage your cash flow so you always have enough money to maintain your business and make payments on time. It can also help you analyse and predict your best (and worst) months or weeks, allowing you to figure out what happened and why.
We know that the course of business never runs smooth - bookkeeping also helps you track and analyse the ups and the downs. If something goes wrong, or you experience an unexpected dip in sales or other income, pulling up your books allows you to delve into the details of what happened so you can avoid the same problem in the future.
Get your tax right
If you’re self-employed, are part of a limited company or are a landlord or landlady then bookkeeping is not an option but a legal obligation. HMRC requires you to take detailed financial records. These must be submitted HMRC in case of tax queries and investigations, as well as at the end of the financial year. As a guide, for accurate bookkeeping for HMRC, you just need to be as thorough and detailed as you can be - make sure you hold all the records that HMRC needs.For businesses that have a payroll, bookkeeping is also essential for tracking wages and calculating tax and deductions. For more guides on bookkeeping, how to make bookkeeping simple and bookkeeping for businesses, please check our other blog posts.
Bookkeeping with Accountancy Cloud
At Accountancy Cloud, we provide a host of bookkeeping services for any size or type of business. We take the stress out of bookkeeping and can streamline your accounts with our excellent accountancy software. Our bookkeeping software has advanced built-in analytics functionality and professional assistance from our trained accountants is never too far away.
Get in touch today to level up your bookkeeping.