Bookkeeping helps you budget for your business, prepare for tax returns, keep your business organised and so much more. It’s something you shouldn’t avoid if you want to keep your finances in check and to make sure HMRC doesn’t come and cause you even more problems. Here are seven reasons why bookkeeping is important for your business.
Bookkeeping is vital to any business because it makes it so much easier to budget. With your income and expenses properly organised, it’s simple to review your financial resources and costs.
A budget creates a financial roadmap for your business. With a budget in place, you can plan for future expenses for your business to help with growth. If you don’t keep accurate and up to date books, it’s a lot harder to get an accurate budget because it’s all mainly guesswork.
As annoying as it is, businesses have to file their taxes at the end of the tax year. With a bookkeeping process in place, you’ll have financial information ready for tax season and the taxman won’t be breathing down your neck.
So, when HMRC demands a financial statement from your business for tax reasons, bookkeeping regularly means you’ll be able to predict the outcome more accurately is you have detailed balance sheets over time.
That last-minute stress of trying to find a crucial piece of business can lead to missed deadlines and some small errors creeping through. Businesses of any size can’t afford to make any mistakes and bookkeeping regularly can help with that.
By doing your books often, staying on top of them and not leaving it to the last second, you’ll be able to maintain organised records. Over time, it’ll make it much easier to find the bits of information you desperately need in no time.
Every business wants to grow, but poor financial records can stop that from happening at the speed you want. With no accurate number or data to analyse, it’s not easy to set yourself any growth goals.
Again, it’s going to be because you’re guessing everything so you’ll be quite disappointed that you didn’t hit the targets you set out previously. By staying on top of your books and keeping regular financial records, you can map out your business goals more accurately and achieve growth.
We all know that the government always comes out with a new initiative which is mainly to make things easier for them. Most recently, it’s the Making Tax Digital (MTD) initiative with which the government is expecting businesses to comply.
It’s exactly what it says on the tin - businesses will have to start doing their taxes digitally through the use of applications and software. In this case, you’ll not only need to do your books but also use an app for it as well.
In all honesty, if you utilise an easy-to-use app then the process is quite simple. Plus, it’ll stop you from facing any penalties and it means you don’t need to waste money on outsourcing your books.
Unorganised books, HMRC giving you problems and those looming tax deadlines can all contribute to plenty of stress and panic. As a business owner, the last thing you want on top of your day-to-day tasks is bookkeeping issues weighing on your mind.
When your books are complete and tidy, they won’t be keeping you up at night. You can rest easy knowing that your business’ financial information is ready to be reviewed without HMRC giving you any anxiety. Your mind will be at ease and you can focus on other areas of your business.
It doesn’t matter if you’re a complete newbie or a bookkeeping veteran. Doing digital bookkeeping offers you plenty of chances to learn and fill in some knowledge gaps. It can be hands-on with an app, free workshops and tools from HMRC or even reading content online.
Bookkeeping can teach you a lot more than you think about your business’ finances. Everything you learn will be beneficial for helping you make smarter business decisions.
As you can tell, bookkeeping is so crucial for your business for many reasons. Not everyone is an expert when it comes to doing the books for their own company, but it’s easier than you think to get started and keep going.
To help you in that journey, we’ve created a checklist full of useful tips on bookkeeping and what to look out for when using an app. Get your free copy by clicking on the link below.
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