Why bookkeeping is vital to your business
No matter how big or small your company is, bookkeeping is a crucial part of managing and running a successful business. On occasion, though, it can fall into disarray due to poor financial management. In these events, you might wish to hire a bookkeeping and accountancy firm to help you get back on the straight and narrow. But why does it matter so much?
In essence, bookkeeping is a matter of keeping records of your company's financial transactions and ensuring every incoming and outgoing cost is accounted for. It requires accurate organisation, particularly in businesses making lots of sales or with inconsistent spends that are hard to keep track of.
Crucially, it helps you keep on top of your cash flow so, should a bill come up unannounced, you know exactly how much money you have in the bank, what tax is owed and how you will be able to settle it without issue. It also means invoices don't get delayed, suppliers aren't put on hold while you try and assess your finances (ensuring relationships also don't break down in the process), and any follow-ups or chasing that needs doing can be done before there is a greater problem.
When it comes to making your quarterly VAT return, having organised books also makes it quick and easy to manage this process. You will have spreadsheets already prepared with all your expenses plus copies of all your receipts, which you can then give straight to your accountants so that they can make the final preparations.
This is particularly crucial if you owe any VAT to the government, as late or forgotten payments can result in hefty fines. If you need to recall any invoices for tax purposes or because of an audit, it'll also be much easier if you've already got organised books.
Having a clear profit and loss sheet is particularly useful in knowing the status of your business. It's also important when reporting to investors if your business has them. Having put money into your company, they will want to know exact details about the state of your financial affairs and having this crucial information to hand will remove the stresses and worries of not knowing what is going on in your company.
Knowing the financial state of your business also means you can make clear, educated and well-informed decisions about the future of your company and what needs to be done. You'll be able to make financially sound plans that make sense and allow for growth, without added risk or potential loss.
If you feel unsure about how to do any of this, you can hire a bookkeeper or accountant who will ensure your finances and books are always kept in order and all tax obligations are met. It can be key in preventing you from becoming bankrupt or having to pay out large fines and will make all the difference in your profit success. If you're looking for a chartered accountant or bookkeeping service in Sussex, contact us today to find out more.
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