Whilst keeping accounting records is a legal requirement and essential for your tax returns, it also offers your business several benefits. Record keeping can be used for much more than just the simple tasks and can go a long way to transforming your financial performance.
Coleman & Co provide a range of bookkeeping services to ensuring accounting records are used for the best purposes. Additionally, we can advise you on what financial benefits record keeping could have.
Accurate Tax Returns
There are many benefits to record keeping, however, tax returns are still the essential reason for accounting records. You should keep your tax records for a minimum of five years after the 31st January in the relevant tax year. If your tax is submitted in 2018, these records must then be kept until at least 2023.
This could prepare you for many financial situations, including tax investigations from the HMRC. This may be unlikely to occur but investigations are possible if your tax returns are inaccurate or seem faked for any reason. Accounting records will also help you keep your initial tax returns correct, reducing the chance of errors occurring.
Whether this is for your end of year accounts or to create financial forecasts for stakeholders, a quick preparation can be beneficial for all business owners. Whilst financial forecasts can be useful, it can be time-consuming and difficult to make without looking at previous financial records. Using your accounting records, annual accounts can be created immediately with the correct finances.
Forecasts and other financial resources may take a bit longer but will be quickly created with previous records. This allows you to look at previous business finances and judge how the business will perform in the future, creating accurate financial forecasts. Spending too much time on this can be an issue for a business, but creating these resources can help.
Many businesses can be successful using their own customers, staff and products. However, if you ever choose to work with other business and create partnerships, having accounting records available will always help. Showcasing your accounting records will demonstrate the success of your business.
It is important to have a strong financial performance and record this accurately and this could even lead to your business being sold or receiving a loan. If your records are kept accurate and stored correctly, it shows that finances are kept in good condition. With your business, there is little risk of your business having a negative cash flow.
Most businesses have a plan to grow, whether this is in terms of profit or the number of staff and branches you have. But how do you know when your business is ready to grow? Accounting records must be kept if you are looking to grow and manage this growth in an effective way. Growing too fast or slow could lead to less profit and cash flow then you require. With growth at the right time, the optimum revenue will be generated.
Your accounting records will make a big difference in successfully managing your growth. With record keeping, you can judge when to invest in your business for growth and when to save. As every business grows, there can be many risks, so finding the right time to grow is essential.
Every business should keep their accounting records for legal purposes and can use them for a number of benefits. For more information on our accountancy services or advice on how to record keep effectively, call Coleman & Co. Make an enquiry on 028 9266 3599 or fill in our contact form today.