The importance of bookkeeping should not be underestimated, and paying attention to books is a sure fire way to maximise profits, avoid serious errors and earn back cash on taxes. Bookkeeping then is one of those investments of time that will earn back enough money to ensure they’re worth the time put in.
Bookkeeping means keeping track of all the money that comes in and out of the company, and filing and keeping documents such as bank statements, receipts and letters pertaining to the company’s finances. The most obvious reason to do this is that it’s a legal requirement and that companies are instructed to keep all of their legal documents for at least six years as well as detailed records of their earnings. This will then come in very handy in tax inspections, as well as at the end of the financial year when they will be required to declare all their earnings to be taxed. Keeping all your records safe and all your receipts together will allow you to claim back tax on equipment, supplies, travel (where appropriate) and more making bookkeeping more than worthwhile.
At the same time though bookkeeping has other advantages from a business point of view. It will allow the company to keep records of their profit and expenditures for their own purposes – allowing them to look for trends and make projections. For example by analysing how profit has steadily risen (hopefully) throughout the year, you should be able to predict with some accuracy what you’re likely to be earning by the end of the next year. This can then allow you to make other plans based on that future profit and measure your success over the next twelve months with a basis for comparison. Noticing changes in profit – dips or increases – can also be a great way to measure what works and what doesn’t; and can also be a useful warning sign if money is being lost somewhere unaccounted for.
Unfortunately however bookkeeping is something that many companies, as well as smaller companies, think they can get away without. It’s all to common to see small start ups and the self employed squirreling away legal and financial documents only to dig it out weeks before their tax report is due and to then rush and bodge the records together. This means they won’t benefit from the money saved by the tax deductions, or from the extra insight they’d have garnered from detailed reports. It is also a big mistake as any errors in that report could land a company in trouble if they can’t back up their claims or are thought to be evading their taxes.
It’s understandable however that this happens to companies, as bookkeeping can be a full time job and get quite complicated. It is for this reason then that so many companies hire outside bookkeeping services to take care of their financial data for them. This way the company gets all of the benefits with none of the work, and if the service is good they won’t lose anything either – all of the money such a service charges should be earned back in tax deductions.
Bookkeeping services can vary depending on the needs of the business. A small business bookkeeper can help reduce the workload of key staff members, and make them more productive. | 
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