Friday, 21 Jul 2023
Financial records are as important to the business as the blueprint of a building to the architect. They inform the entrepreneur, stakeholders and partners about the money coming in and going out, giving them a clear picture of the bottom line.
These records are necessary to have evidence of the transactions made by the business. Also, the business owner will have no clue about the expenses and income without them. Thus, it is necessary to register every exchange of cash or online transaction to ensure up-to-date books.
Besides documenting everything, it is vital to enter the details correctly to avoid miscalculations and financial blunders. Since entrepreneurs do not have the time to verify every transaction and update the books, they depend on professional bookkeepers for the task.
Let us help you understand the importance of accurate record-keeping in bookkeeping to get a clear idea of this process. It will give you an insight into the invaluable contribution of bookkeeping in running a business.
Record-keeping is a basic function of bookkeeping and is an ongoing task. Here are the benefits of maintaining flawless books.
Every business has to maintain accurate records to comply with the legal obligations in Melbourne. Businesses must have records for up to five years and must include all transactions that are financial in nature. The Australian Taxation Office (ATO) needs the information to determine the taxes and super obligations of the entity.
The records should be preserved effectively to safeguard them from damages and unintentional changes. The old records must be easily accessible and organised correctly to be presented to the ATO whenever required. These include invoices, bills, credit card statements, bank statements, online sales, etc. The paper bills must be saved digitally to ensure they are legible even after years.
When the financial records are updated and accurately noted, the risk of fraudulent activities by employees and suppliers reduces. It ensures the business owner is well aware of the cash flow, income, and expenses at all times. They can quickly identify any discrepancies and catch fraudsters.
In addition, expert bookkeepers Melbourne keep a backup of the financial records to protect confidential information in case of cyber attacks or unforeseen situations. Detailed records can be easily audited and checked for errors as well.
Financial statements are prepared by the bookkeeper regularly to give a better idea of the financial health of the business. These reports include the balance sheet, income statement and cash flow statement. With the help of these documents, the business owner can make data-based choices related to new expenses and investment-based deals.
Referring to these reports reduces risk and strengthens financial management. Many businesses use accounting software for record-keeping, further streamlining the process while maintaining accuracy. Machines do away with the manual task entry task and eliminate calculation errors.
Tax payments are legally binding for every business in Melbourne, and it is possible to calculate them correctly through error-free record-keeping. It requires the details of assessable income and deductions. The updated books help identify the taxable and non-taxable income and small business concessions that can be claimed to reduce the tax bill.
Record-keeping ensures efficient tax planning and lodging the taxes to the ATO on time without any hassle of facing penalties. The accounting software helps to make this task a breeze and saves time and money.
When the business owner is aware of the cash moving in and out of the business, they can manage it better. They can check the records to identify which expenses need to be curtailed and which can help generate revenue. They can prepare the budget for the next quarter based on the available data and ensure they are not making assumptions that can cost the business dearly.
Professional bookkeepers in Melbourne take charge of cash flow management because they are well-versed with the financial conditions and know strategies for maintaining a positive cash flow. They can help reduce losses and push initiatives to boost profits and grow the company.
Record-keeping also plays an influential role in maintaining well-organised and accurate books, which is vital for securing funding. Every investor and moneylender will check the financial records to ascertain the financial health of the business and get a clear picture of its expenses and income.
Thus, when the records are properly organised, they help to get funding from banks and financial institutions without any challenges. Most moneylenders hesitate to lend money to businesses that do not have accurate records.
When running a business, it is crucial to follow the inflow and outflow of money with the help of record-keeping. It gives an idea about the financial standing of the entity and how cash can be utilised in the future. There are numerous benefits of accurate record-keeping. Thus, it should not be ignored at any cost.
