4 Reasons To Keep Good Records In Business

When you run a business, there are certain important jobs that needdoing. Record keeping is one of them. It may sound boring, and you may not enjoy it, but it is absolutely essentia lfor a variety of different reasons, not least of which is that the HM Revenue and Customs require you to do so! However, even if the government did not ask that for you to do this, there are many good reasons to keep records; here are four of them.

1. Monitor Progress

If you don’t keep records,it is going to be difficult for you to monitor the progress you are making in your business. Records will show you how much income you are generating, and how much you are spending, for example. It will show you improvements from year-to-year or month-to-month. Making sure that you have these records will keep you moving in the right direction as you will have a better idea of what works and what doesn’t. If you need to backdate some records to give you a fuller picture,then you can use tools such as a check stub maker, and then continue to keep better records in the future.

2. Prepare Financial Statements

Having accurate financial records will help you when it comes the time to pay your taxes and also if and when you want to attract additional investors. Financial statements include profit and loss sheets and balance sheets, and being able to hand these items over to the relevant people when required will save you a lot of time and trouble. To have these documents be as accurate as possible, you will need to keep good, detailed records along the way, otherwise,you will have a long and difficult job ahead of you.

3. Identify Income

Moneywill come into your business from a number ofdifferent directions, andif you have good record keeping skills,you will be able to keep track of them all and ensure that everyone who should have paid has done. If you don’t have good records, you may never be sure whether someone has paid or not, and that means you can’t confidently chase them for payment. Asking a person or company for payment when they have already paid is embarrassing and can give your company a bad reputation. Not asking for payment when someone has not paid means that your business can quickly fail. Keeping accurate records is the only way to get it right.

4. Identify Outgoings

Just as knowing whether someone has paid you or not is important, so too is knowing what money is going out of the business. You need to ensure that, if someone is asking you for money, you can prove to them that you have paid it, assuming you have! It is also good to know exactly how much you are spending in certain areas of your business, such as marketing and staff salaries. Having this information to hand means that you can check that these payments are bringing in money and are therefore worth continuing with.