When it comes to keeping good records we all seem to acknowledge that things could be done better.

But why is keeping good records important?

Here are twelve reasons why it’s so important.

1. Enables you to manage your business and make it grow

No one knows your business better than you do, but reliable information can only be extracted from the records you keep.

If you don’t have good records, it’s much harder to make good decisions.

2. Helps to stay organised when dealing with customers and suppliers

Producing invoices, quotations and estimates promptly is vital.

An early estimate can be the difference between winning and losing a job. Similarly do not rely on supplier’s statements. You need to know before they tell you how much you owe.

3. Makes it easy to prepare management accounts

Have you ever wondered whether you are making or losing money?

Management accounts do that for you. You want to know how your business is performing. With management accounts you can compare one period with another, this year with the previous year.

4. Makes it possible to find important information and documents quickly

Is someone disputing your invoice?

By being organised you can quickly and easily find information regarding the original order and the goods and work supplied.

5. Makes it easier to get a bank loan or overdraft

Yes, banks like it when you seek an overdraft for the right reason and at the right time. Don’t wait until you need one to ask for it.

6. Helps you plan in advance for tax payments and other liabilities

Tax planning is for everybody. Set money aside when you have the cash. Or make an arrangement with HMRC in good time.

7. Helps us to check your tax position accurately

Does HMRC make any mistake? Sometimes they do.

By being organised you can check the accuracy of your tax position.

8. Helps to reduce your accountant’s fees and save them time

We will always help by giving you extra value for your money. But if records are really untidy eventually this will cost you more.

9. Makes you filling your tax return easier and can save you tax

Have you ever had a call from your accountant wanting to know about a VAT Return or some other item of expenditure?

Maybe he needs to make a claim to HMRC for Tax Relief. By being organised you are sure to include everything you are entitled to in any claim or return you make to HMRC.

10. Avoids interest and penalties by making it easier to pay the right tax at the right time

Penalties are here to stay!!! But we are here to avoid them. By the time a deadline comes everything will be filed and in good order.

11. Will support your claims to some tax reliefs or capital allowances

What are capital allowances? They are provisions that can save you a lot of tax when you purchase equipment or similar assets. Don’t miss out on the opportunity just because you have lost the paperwork.

12. Record keeping complies with the law

Good record keeping is a legal requirement under the rules of assessment. So, by being organised not only you have all of the above benefits, but you stay within the law.

Complying with HMRC requirements is in fact a very important reason why you should keep good records.

Summary

So, you see that it’s very important to keep good accounting records.

Making the decision to invest in an accounting SaaS subscription is one of those decisions often added to the "someday" list. You know your company needs accurate accounting, but feel it feels like a decision that can wait, since other business activities seem to take precedence. It is only when it is too late that you realize just how important accounting is to your company. If you have been procrastinating on an accounting SaaS subscription decision, here are eight reasons the time to stop deliberating is now!

CREATE/CONTROL BUDGETS

Accounting helps business owners create and control company budgets. When you know how your money is coming in and going out, you are better prepared to monitor business budgets. A company without budgets is like a ship drifting at sea without a captain; accounting helps ensure your business isn't heading for a Titanic-style iceberg.

FORECAST REVENUES

Business owners who pay attention to their accounting are informed and better able to forecast revenues for their company. Revenue forecasts help you understand whether current marketing efforts are working or whether changes need to be made. If you can't forecast revenues for your company, you won't know whether it is safe to make business-related expenditures.

MAJOR BUSINESS PURCHASE DECISIONS

Speaking of expenditures, accurate accounting helps business owners consider the ramifications of making major business purchasing decisions. From a new building lease to company vehicles, major expenditures can have a significant impact on monthly cash flow. When you monitor your company's accounting on a regular basis, you can make an informed decision on purchasing new assets for your company.

TRACK BUSINESS EXPENSES

Accounting helps you to track your business expenses. Whether you are attending industry conferences or fueling your vehicle to make sales calls, monitoring your business expenses is an essential part of owning a company. Little expenses can add up over time; a wise business owner tracks these expenditures on a daily basis via their accounting software. It’s a good practice to snap a picture of every receipt you receive and send it directly to your accounting software.

MONITOR BUSINESS FINANCIAL HEALTH

Accounting helps you to monitor the health of your company. Too many expenditures without an adequate cash influx spells trouble for any company. If detailed accounting isn't part of your modus operandi, how will you ever know if your company is succeeding or failing? Investing in detailed accounting helps you keep your finger on the pulse of your company's financial health.

PERSONNEL DECISIONS

Accurate accounting records can also help you make personnel decisions. Knowing when to bring on additional staff, or when to lay off employees, can mean the difference between having a profitable year and being in the red or not. When you understand how much your business is spending on payroll (including payroll taxes), you are better prepared to make growth decisions for your company.

ACCURATE RECORD KEEPING FOR FINANCIAL INSTITUTIONS AND/OR TAXES

Accounting also helps you keep accurate records for financial institutions and tax preparers. Applying for a business loan will require detailed company financials. If you don't provide accurate business books to your tax preparation team, a complete fiscal tax audit could be in your future. Not only does accounting help you grow your company, it helps prevent damaging events like fiscal audits.

MONITOR BUSINESS GROWTH

The ability to monitor business growth is one of the top benefits of detailed business accounting. When you know your assets, liabilities, and on-hand revenues, you can easily track the growth of your company. You'll know whether sales targets are being met, whether your social media and content marketing strategies are working, and whether your accounts receivable and accounts payable obligations are being met.

These are just eight of many reasons business owners should invest in accounting. Using financial accounting software makes the job easier and the reporting more detailed. You can understand the impact of your financial decisions on all departments when you incorporate accounting software into your company. Is this the year you focus on growing a healthy company with effective accounting procedures?