These are documentary evidence of summarized business transactions. These well-organized financial records consist of invoices and receipts to be used by many accounting departments.
Why is it crucial to keep good financial records?
Many reasons show that keeping accurate and up-to-date financial records is important. Keeping up with top business finances in order is all you need in the long run.
- If you keep financial records accurately in an orderly manner, it will be easy for you to file tax returns or annual accounts. It helps you submit the annual reports quickly and orderly.
- It saves your accountancy fees. Yes, you heard me right, with your hired accountants and bookkeepers; you can save your hard-earned money. If your financial records are well-organized, they won’t be going through the hassle of digging deeper into records.
- If you streamline your finances properly, you can easily locate your business hidden abnormalities. Up-to-date records help you profitably align your operations.
Basic record-keeping systems:
Many record-keeping systems have made financial records simple to use, easy to understand, and provide timely information. Here are some basic accounting systems you should use to retain financial records in your business.
- Cheques Journal
- Cash Receipt Book
- Sales Day Book
- Purchases Day Book
- Debtors Records
- Creditors Records
- Sales Invoices
- Purchases Invoices
- Stock Record
- Bank Statements
How to keep Financial Records efficiently?
Keeping up-to-date, quality and accurate financial records plays an active role in the success of the business. Your business growth depends upon the efficient keeping of financial records.
First, we need to understand financial record keeping and how long we can store such information for our business. Such important financial information includes:
- Source document records include both physical and electronic showing data with dates and amounts
- Then comes contracts and legal documents
- Other records are private customers and business details
Get professional help
If you are still confused about which records you need to keep, you can seek the assistance of professional accountants and financial advisers. You will get to know about the system and software that is best for your business. It is better to seek the help of experts to ask how long they should keep the records.
You can seek the help of virtual accounting services and virtual bookkeeping services. For instance, you may think it as a costly and time-consuming decision, but in the longer run, it is profitable to get professional help for your financial record-keeping purposes.
A question may arise in your mind how professional help can benefit you. Here, we have all the answers to your queries.
- It saves your time and energy to invest in raising the credibility of the company you are working in. You can utilize the time in hitting new projects and win more work instead of getting your head into accounts.
- You will find out that tax advisors and professional accountants help you streamline your accounts and expenses. They save you from headaches of struggling with financial record keeping. You will see the difference at the end of the month or year that you save a lot of money.
- Professional accountants and certified advisors, help you avoid many penalties and keep you compliant with the accounting principle.
- Not to mention that you can deduct their fees as your business expense
Benefits of keeping Accurate Financial Records:
- It helps you protect your business
- It measures your performance
- It maximizes profits
- It plans and works more efficiently
- You can generate meaningful reports
- You can meet legal and tax requirements
- It protects your rights
- It helps you manage your potential risks.
What do you need to record?
It is better you have the financial record information, necessary for you by the end of submitting accounting details and tax returns. So, if you don’t want to end up submitting irrelevant accounts and financial information, you can just ensure that you accurately record the followings:
For complete transparency, you have to give every tiny detail of expenditure as receipts, and sales related to your business. It depends whether your company wants to maintain electronic details like scanned companies or paperwork.
The next record should be an invoice related to all the income that comes in the way of your business. This record must contain the invoice amount, date, and type of work against which the invoice was required. The next step is the reconciliation of invoices with the bank statements.
After that, you have to reconcile bank statements at the end of the month or at the time, they were produced. Moreover, you can match the receipts and invoices with the values you have recorded.
Other records to keep
You need to keep records for the things such as payroll, cashbooks, vehicle use logs, travel logs, tax returns, stock takes and credit card statements. You can get further advice on this matter from your online accountant or online bookkeeper as well.
If you want to manage your books effectively and keep good financial records, you should follow these steps:
- The right bookkeeping system for your business helps it grow easier. It makes the process less tiring, less time-consuming, and staying up-to-date saves your money. All you need to select the right accounting software for your business to keep records of expenses, income, and taxes.
- Schedule your record-keeping processes. It means that if you take this responsibility to check records, do it immediately in the morning or at the end of the day.
Managing records at the end of the week is also a good idea. By doing this, you can avoid piles of records lined up for you in the end and you may overlook a bunch of errors and mistakes, leading to wrong record keeping.
- Get the right advice from your expert accountant or financial advisor
- Reconciling your bank statements to make sure that income and expenditure are well balanced. Moreover, you can also use accounting software to make things easier for you in the long run.
- Keep a close eye on your business invoices. Check for any late payments. You can charge additional fees as these late invoices affect businesses to the core and disturb the cash flows.
- Grab a keen understanding of your business accounts to understand them better.
- Keep your business finances separate from personal finances. Maintaining a separate bank account for business income, expenses and expenditure saves you from the risk of records getting mixed up. You can keep track of business records and there won’t be any risk of tax avoidance.