Keeping a Good Financial Records – Why is it So Important?
Financial records are one of the most important records to keep, especially for small businesses.
Messy financial records can create a problem for small businesses. If you can’t keep your books, you can get into trouble. And, the trouble is – an IRS audit, which you should avoid at any cost. It is necessary that you are aware of any legal requirements you have.
With that in mind, you need to know the importance of keeping a good financial record.
Be Responsible, Start With Financial Records
There are a good number of reasons why it is important to be on top of your business’ finances. You need to also make sure that all of your records are in good order. You never know when will you need them, so better be ready.
Here is why that’s beneficial:
- It’s much easier to file your tax return or annual accounts. Once it comes to submitting your annual reports, having all of your financial records in place will make this dreading job much simpler.
- Helps you save money on accountancy fees. If you choose to hire a professional to help you with your finances, their job will be much simpler.
- Try to understand where your business is rapidly growing or failing. Moreover, having accurate and precise financial records will allow you to see where your business is doing well. With this in mind, you can also keep track of any areas where it is doing badly. This allows you to be efficient with your operations and possibly increase profitability.
Establishing Business Bank Accounts Can Help in the Long Run
A business must be distinguishable from you, and the easiest way to accomplish this is to establish bank accounts.
Furthermore, not only does this allow for the business to be separated from the owners, but it also makes a clear line between business activities and personal expenses that may happen.
A business bank account can help you easily track any income and future expenses.
Try to Be Organized: Schedule a Specific Time Each Week
If you are going to do this, some may say, mundane task, you need to be keeping and maintaining your business records. Besides, as a business owner, you need to be sure to schedule a specific time each week, the time you can devote, to keeping your records up to date.
To not burden yourself later, take a day each week to review your income. As well as your expenses, and manage your accounts, business, and personal.
Making sure that there is a set schedule will help you in a long run. You are doing this to ensure that you stay on top of your financial record, and have a necessary overview of how your business is doing, while also allowing you to control your cash flow.
Try to Avoid Using Cash
If you spend cash without the proper documentation, it will make it extremely difficult for business owners to keep and maintain good business financial records.
It’s fairly easy to forget how and where exactly cash was spent when you don’t have the proper documentation. For that reason, it is recommended to use a credit or debit card, or even a check instead of cash, as there is an actual paper to follow, so this practice will help you to keep track of any expenses.
Having that in mind, when you use cash instead of credit card, you will be missing out on taking advantage of write-offs, because you will have no documented proof.
If you really need to use cash, a better solution would be to pull money out of the ATM, then make a note on the receipt as to the purpose of the withdrawal.
Hire an Experienced Bookkeeper to Help You!
Your business will start to grow, that’s for sure! And while that is happening, you should think about hiring an experienced and trusted bookkeeper. There are a bunch of benefits you can have if you hire a bookkeeper to assist with your record keeping. You don’t have to worry about keeping your business records, so automatically you have more time to dedicate to your business. You’ll have the time to focus on expanding your business, as well as be sure that your records will remain up to date.
However, the problem occurs when business owners don’t know where to find a trustworthy and reliable accountant. They want someone to take the stress out of their accounts for them. Here at Your Part Time Accountant, we are able to recommend a number of professional accountants in your area.
Contact us today and get help in the most efficient way. Especially ensuring that your business’s financial records will be dealt with carefully.