Are you currently overlooking bookkeeping for your business? Do you know how bookkeeping can help take your business to the next level? Are you trying to make key business decisions based on your outdated statutory accounts?
This article will help explain what bookkeeping is and how it can be of use to your business.
What is Bookkeeping?
The fundamental aspect of bookkeeping is the recording of transactions both incoming and outgoing. Bookkeeping for businesses involves processing transactions such as sales, purchases, receipts, and payments. The aim of bookkeeping is to provide you with accurate and up-to-date financial information of your business, and this can then be used to make key business decisions.
Why We Need Bookeeping for Businesses?
Businesses will often overlook bookkeeping as it is not a statutory requirement and believe it is not necessary for their business’s success. However, the purpose of bookkeeping is to add value to your business. You can make it fit your needs by having it on a quarterly, monthly or weekly basis.
How can bookkeeping for businesses benefit me?
Track your Debtors and Creditors
Bookkeeping allows you the ability to track who you owe and who owes you. With accurate and up to date records you can easily see what money is outstanding to you, this will make credit control for your business easier to manage. You will also be able to manage the outgoings of your business and make use of payment terms with suppliers to help improve your cash flow.
Bookkeeping for Businesses Help in Tax Planning
Tax planning can help minimise your tax liabilities whilst also maximising profitability. Effective tax planning can be assisted by up to date and accurate bookkeeping as we are able to see the position of the company and can predict what will happen in the future allowing us to effectively plan to manage your tax liabilities.
Track Exceeding Thresholds
There may be many thresholds you need to monitor as exceeding these can have impacts on your business such as: the VAT threshold for compulsory registration, cash accounting scheme for VAT, the new corporation tax thresholds for rate changes. It is important to keep an eye on these thresholds as they can have a big impact on your business and bookkeeping can help keep on top of these.
Highlights Strengths and Deficiencies
Bookkeeping for businesses can highlight areas your business is excelling in as well as highlighting areas that there may be excessive expenditure. For example, you could be paying money out regularly to repair a piece of machinery, with bookkeeping software you can look at this over a period of time to see how much this is costing you and if it would be more efficient by replacing the piece of machinery. Bookkeeping can aid in helping maximise your business strengths while minimising the threats of your deficiencies.
Paying Yourself
One important aspect of your business is keeping on top of your Director Loan Account (DLA). Keeping a track of your DLA can help structure how much dividends you can take from your business, track expense reimbursements from the company to you. You will also be able to see if the company owes you money.
Conclusion
Bookkeeping for businesses can give you a deeper insight to your business and help make decisions on up-to-date information. Bookkeeping is used to add value to your business and help it grow not just to comply with statutory requirements. If your interested in finding out more about our bookkeeping services, contact our team for further information.
