The importance of bookkeeping in a business
Every company needs bookkeeping to make sure its finances are in order, 24/7. Poor bookkeeping practices can cause a great deal of mayhem. Here are a few reasons why bookkeeping is essential to every business.
Be more informed
As a business owner, you should have all the information relating to your company’s transactions. Without having complete knowledge of your expenses and investments, you can’t make progressive business decisions. Proper bookkeeping will allow your accountant or CFO to analyse your books and come up with comprehensive reports.
The law requires it
You may want to avoid bookkeeping services, but you can’t do so because the law requires you to keep proper records of your business transactions. This practice enables the government to ensure all companies maintain transparency.
Bookkeeping will help you keep your business organised. Also, it will enable you to think, work, and react better because good bookkeeping calms the mind.
Preparing VAT returns can take a lot of time and effort especially if the information you need is in many different places. You must have all your financial records, including cash flow statements, balance sheets, and profit and loss statements. You don’t want to be looking for receipts at the last minute. A bookkeeper will help you prepare everything you need to file your tax returns.
Keep investors in the know
You need to update your investors about your business operations so that you can maintain rapport with them. Also, when approaching prospective investors, you’re expected to provide data that demonstrates that your company is in good standing. Through proper bookkeeping, your investors will be able to access detailed reports regarding the financial status of your company.
You need certain pieces of information to plan for your company’s investment future. Your bookkeeper’s analysis will help you make informed decisions and come up with effective business strategies. The existing financial records will influence your plans to budget, invest, and expand.
Analysis and management
You should analyse and manage your cash flow to figure out the improvements you need to make. Proper bookkeeping will enable you to monitor your expenditure, keep up with the incoming cash, and pay your invoices on time.
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