Proper bookkeeping is an essential tool for the success of any small company. Though many owners see bookkeeping as an unnecessary diversion, sound accounting practices make or break your business. Keeping records ensures your business is on the right path and based on the company model. For any business, there should not be any transactions without a receipt.

Records are good evidence of business transactions. Receipts and invoices are documentation of your company’s sales, profit, and expenses. Bookkeeping ensures all your business’s activities are transparent, coherent, and proficient.

Importance of Good Bookkeeping to Your Business

• Helps Manage Your Company

Good bookkeeping practices ensure you keep track of all your progress. Records will help you better understand how your business is running, what you are selling, and what changes you need to make to ensure efficiency and maximize your profitability. Knowing your business’s strengths and weaknesses might be the breakthrough you need to achieve success.

• Get Organized

Receipt and invoice books are perfect tools to ensure organized transaction records. Information filled should be arranged in a chronological order making it easy to backtrack and identify details that you may need. Besides, producing receipts, quotations, and invoices to all your clients and suppliers shows professionalism.

• Ease of Preparing Your Financial Statements

Records show if you are making or losing money. Receipt records are crucial when preparing your balance sheets and financial statements. Logs are an essential indicator of your business’s economic performance.

• Identifying The Source of Income And Expenditure

Your business may have multiple sources of income and expenditure. Having records can ensure you have a clear idea of where your cash flow.

• Keep Track of Your Taxes

Avoid under or overpayment of your taxes—bookkeeping assists when preparing your tax returns. Organized sale transaction invoices play a crucial part for tax purposes. Also, records will ensure you identify taxable and nontaxable income in your company.

• Avoid Tax Penalties and Audits

Financial tax audits can be a real problem for any business. Good records ensure more accessible filing and payment of taxes, avoiding any late penalties. You can also prevent unnecessary audits for your business.

• Getting Bank Loans

Moreover, records help you identify your company’s income, expenditure, assets, and liabilities. Providing accurate financial data to banks or other financial institutions may help maintain good relations. This will improve your ability to take any loans that are essential for your business’s growth.  

How Long Should I Keep My Receipts and Records?

The law requires your company to have proper and accurate records. In general, you should hold on to your receipts and invoices for a minimum of five years. In some cases, you might need to hold on to them for a more extended period.  

Tips for Good Record Keeping

• Understand The Difference Between Receipts And Invoices

Though the term is used interchangeably, having a clear differentiation between the two will play a role in record management. Receipts are used as proof of transaction. They are used after a sale or service delivery to your customers. Invoices are bills sent to your customers for a service or good that they will receive from your business.

• Have A Handle of Your Cash Flow

Cash flow statements are a fantastic way to keep track of your financial direction. The cash statements identify the ins and outs of all the money coming into the company. Also, the cash flow statement will enable you to anticipate cash outflow, and you can allocate any funds accordingly. The statements give you a better understanding of your business’s financial path.

• Regular Reconciling of Records

Taking a couple of hours a week to reconcile your receipts and invoice may take a load off when compiling your records. Check your income and expenses regularly to ensure you have an understanding of your company’s performance.

• Hire A Professional

If keeping track of your records becomes a headache, you can always find qualified personnel or a firm that can perform all your company’s accounting and bookkeeping. Having the right access to an accountant can save you a pretty penny when doing your taxes. It will also reduce your chances of overpayment, underpayment, or penalties.

In addition, if you need any assistance in keeping track of your record, do not hesitate to contact us today. Our years of experience will ensure you get the appropriate advice that you need to grow your business and ensure its success.