Maintaining books in a business can make anyone band their head on the table but there’s no option, you have to maintain it right. And if you are planning to hand it over to someone, you must ensure they are safer hands. Why is bookkeeping that important? Here’s why.
For any business firm, bookkeeping is considered the most important as it is the pillar on which the edifice of the entire accounting system stands. This integral process includes recording, classifying and analysing all the financial transactions of a business firm and techniques involving recording those transactions. Maintaining accurate books and records is very crucial for a business firm, failing which may lead to winding up of the business due to unexpected challenges and outcomes.
Most important tips for brilliant Bookkeeping
1. Never mix business and personal finances
It is advisable to open a separate bank account for your business and not to mix both business and personal finances. Maintaining a separate record of your business transactions can help you to keep an exclusive check on the inflow and outflow of business money. This helps to maintain transparency in the business and can make the bookkeeping process a whole lot simpler. Transfer the money to your personal savings account from your business account whenever needed and avoid using your business account for any personal expenses. It is also advisable to go through your bank statement once a month so as to avoid or combat any fraud or risk and also to take an insight into where’s every pound spent.
2. Not all the business money is yours
You might be the owner of your company but that doesn’t mean you can spend the company’s money unless it is for a business purpose. Under all circumstances, it is important to be responsible and keep abreast money for other financial obligations such as tax, bills, supplier bills etc. Enough funds should be calculated and kept aside to satisfy any business contingencies.
3. Maintain accurate records
Bookkeeping is basically the recording of various financial transactions which includes sales, purchases, payments and receipts by an individual person or an organisation. Entering these transactions under appropriate heads is what an accurate bookkeeping is all about. The books that are required to be maintained to record these transactions are:
- Cash book: It is a subsidiary book which records all the cash payments and receipts including the bank deposits and withdrawals. This systematic and permanent recording of cashflow can be a useful tool for further business planning and forecasting.
- Sales invoice file: It keeps a record of all sales made. A sales invoice is an invaluable accounting tool that helps to track the date of the goods sold, how much money was paid and the amount due if any. It is advisable to keep unpaid and outstanding invoices together under a separate section.
- Purchase invoice file: It records all the purchases made in a chronological order along with the mode of payment adopted.
4. Stay compliant and overrun deadlines
TAX and VAT filings are inevitable for any business of any size. Staying compliant in running a business and implementing transparency in all the businesses dealings can help you to tackle any HMRC investigations efficiently.
Stay on top of the deadlines and make sure that the self-assessment, accounts, VAT returns, PAYE returns are all filed on time in order to avoid any HMRC penalties.
5. Hire a professional
Outsourcing an efficient and dedicated accountant can save your valuable time and resources tied up with this routine bookkeeping and accounting enabling you to maintain healthy cash flow. It will also help you to focus on other strategies driving your business towards success instead of getting stuck with a pile of paperwork.
The professionals from Limelight Accountancy offer tailored bookkeeping services after knowing your specific requirements. They set up appropriate accounting procedures and controls and ensure compliant bookkeeping. That is not all. Their regular management accounts service will keep you informed about the important aspects such as cash flow, profitability, performance ratios, customer activity, credit control and budget comparisons.
In addition, they also offer services of preparing payroll administration, VAT returns, Bank reconciliation and annual accounts. Handing over the recording of your financials to such an efficient company where every aspect of bookkeeping and accounting is taken care of in detail under a single platform and that too in compliance with statutory requirements is what is all needed for your company to plunge ahead and lead.
You got to do it
No matter how much we all hate bookkeeping, skipping it can put you and your business in big troubles. Clean and well-maintained bookkeeping clears the path for the growth of your business and when done by an expert in it, the road ahead for your business will smooth and strong.