The financial statements of a business tell you what’s going on. The income statement tells the story of the current situation. On the balance sheet, you may see a historical snapshot of the company’s assets, liabilities, and equity.

But to tell the whole story, record keeping is necessary to provide the context. Keep reading to find out more about why record-keeping is so important for your small business.

What is Record Keeping?

Accounting involves keeping track of things like transactions and events in your accounting system. Keeping records is a fundamental part of accounting because it’s all about having accurate and detailed records.

The Importance of Record Keeping

Record-keeping helps in maintaining positive interactions with clients.

If you want to know how your business is doing at any given time, you need to keep accurate and up-to-date records of what’s going on every day. You need to make sure you’re reporting all the money you’ve received from customers. That way, you can make sure you’re collecting payments and getting them to the right people.

To guarantee that your income is properly reported, you need to regularly update and analyze your cash flow. Applying your clients’ payments correctly will promote repeat business and strengthen your client relationships!

Stop theft & fraud.

Having a fraud security plan that includes keeping accurate records of your business spending and transactions is critical for your business, whether it is a startup, small and medium enterprise (SME), or large organization. Understanding your company’s cash flow will assist you in creating accurate financial accounts for accounting and auditing purposes, as well as understanding how much cash enters and exits your organization.

Pay your taxes

If you keep good records and offer accurate documents, you can pay your taxes accurately and on time while avoiding fines.

Follow the rules

Good record-keeping systems are important because they allow organizations to comply with various laws in different countries. Businesses should have good accounting and cost-management systems for efficient record-keeping and filing.

 Manage your cash flow.

When it comes to the financial administration of a growing strong, cash is everything. Maintaining a steady cash flow that can endure pandemics and other unexpected events is critical if you want your company to survive in the long run, as COVID-19 clearly shows.

Record-keeping becomes important at this point. It helps you correctly assess the health of your company’s finances as well as understand where your money comes from and goes.

Save time and money.

A good record-keeping system can save you time and money when it comes to filing reports and conducting financial year-end closings because you won’t have to rush to meet deadlines or hire someone to manage it.

Alternatively, you may consider hiring a corporate secretary. Startups and SMEs can do this because there are reasonably cost corporate secretary services available that can be less expensive than hiring an additional employee!

Start good record-keeping practices.

We hope you will keep an eye out for your records and ensure they are properly maintained and retained now that we have addressed the importance of record keeping and given you guidance on how to do it.

If you’re a startup or small business owner and have any ideas or tips on how to keep track of your records, get in touch with Js Partners and we’ll be happy to help. Let’s work together to create a great business community.

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