5 Effective Benefits of Business Bookkeeping

It’s something we all dread: organising our business finances! But the fact is, it’s an essential part of setting up any small business. There are numerous benefits of bookkeeping and the importance of it can make or break a business. Besides that, it’s also a legal requirement to maintain detailed financial records such as tracking expenses, profits, assets and taxes. In addition to helping you grow your business or company, maintaining your business budgeting can also save you money.

Although you might feel that being a self-employed business owner is always a juggle, here are 5 effective benefits of bookkeeping.

1. Helps you budget

Keeping track of your income and expenses also means you are in a better position to stay on top of your business budgeting. If you’re not organising your cashflow and books, you won’t get an accurate view of how well you’re trading. In contrast, using your time to regularly update your budget means you can anticipate future expenses, and losses. If you don’t, then you’re pretty much guessing what your budget is, rather than spotting discrepancies and trends.

2. Plans for expenses

How many of us fear getting our tax or VAT bill? The business of organising small business bookkeeping allows us to have all the financial information ready in time for those annual bills. When it comes to filing a HMRC tax return, it’s much easier to know how much you have earned rather than scrambling around at the last minute for paperwork. It also means you should have the money to hand over to the taxman as you have forecasted it into your monthly budgeting. However, it doesn’t all go to the taxman, what about budgeting for other expenses such as equipment, wages, supplies and repairs?

3. Saves you money

Staying on top of your business accounting will give you the confidence to create an organised budget whereby you know exactly where every penny is going, or has been. It helps us be less wasteful with our spending and understand what generates money for a business. Additionally, it means you can track your invoices better and chase up overdue payments that are costing your business money. Alternatively, maybe you took out loans to set up your business? In this instance, budgeting for your monthly repayments will ensure you remain out of debt or get a bad credit rating.

4. Sets out goals

Having healthy financial goals and records means you can easily see your business goals and targets. This in turn, will encourage business growth. Plus, it’s one of the most insightful benefits of bookkeeping. Learn how to use bookkeeping as a useful tool for developing strategies through sales, marketing and improving cashflow. When you do this, you can clearly see a snapshot of how your business is performing and where to incorporate tactics to improve. Focus on the financial results, track them frequently and see your business boom.

5. Uses virtual bookkeeping

With Making Tax Digital being phased in and the increase in online bookkeeping tools, such as Quickbooks, using these to our advantage can only improve our bookkeeping skills. It’s all too easy to feel drowned in paperwork but with virtual bookkeeping software, it all becomes much easier. Invoice and bill payments, for example, can be simplified through automation. Similarly, orders and purchases can be tracked so you have a clear idea of all your financial productivity.

Wondering where to start?

If you haven’t already implemented a regular system into your business, check out my bookkeeping spreadsheet. I’ve designed it specifically for bookkeeping beginners in mind. It will prepare you to complete your self-assessment tax return by tracking your income, expenses and taxes. I’ve also made it customisable and easy to automate your entries. 

Whichever method you decide to go with, being ahead of bookkeeping basics will enable you to take control of your business’ finances. Whether you decide to hire an accountant for extra help or take the riens yourself, you can benefit your business hugely by being efficient with your bookkeeping. 

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About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek and money nerd helping financial DIY-ers organise their money so they can hit their goals quicker.