For the success of the business, keeping financial records accurate and up-to-date is important. Accurate financial records help you to reduce losses, meet any legal and taxation authority requirements, and manage cash flow. Melbourne bookkeeper can help you maintain your financial transactions. Record-keeping is the process that every business must keep track of. It is also a legal obligation to keep a proper record of financial transactions, employee records and important documents related to fringe benefits and capital gains for all businesses.
What is Financial Record Keeping?
Record-keeping is how you store important financial information about your business. Records can be:
- Source documents, both electronic and physical, that show transaction amounts and dates
- Legal documents or contracts
- Private business and customer details
6 Reasons to Keep Financial Records Up-To-Date and Accurate
Record keeping is the process of storing transactions and events in the system. As you may know that tax return accountant completely relies on accurate records when preparing and lodging tax returns, thus it is important to keep good records for your business. You can perform the following tasks if you maintain financial records in your business:
1. Monitor the Business’s Progress
To monitor the progress of your business, you need to have accurate and updated business records. With the help of records, you will know whether your business has been making improvements, what changes need to be made or which items are selling. Accurate records can maximise the chances of business success.
2. Prepare Financial Statements
Bookkeepers of Melbourne need good financial records to prepare financial statements. These include a balance sheet and income statements. With the help of these statements, you can deal with your creditors or bank and manage your business.
- An income statement shows the expenses and earnings of the business for a specific time period.
- A balance sheet shows liabilities, assets, and equity in the company on a specific date.
3. Prevent Fraud
To prevent fraud, it is important to keep detailed financial records of your business’s financial transactions and expenses. If you have proper knowledge of the cash flow of your business, you will be able to understand how much money flows in and out of your business. As a result, bookkeepers for small businesses can produce accurate financial statements for auditing and accounting purposes.
4. Prepare Tax Return
To prepare the tax return and lodge it on time, you need to have good records. These records must support the expenses, income, and credits you report. Usually, these are the same records you use to keep track of your business and prepare your financial statement. Having prepared records and tax returns, your accountant can pay your tax return on time and save on penalties.
5. Save Time and Cost
When you need to prepare and lodge a tax return, a good record-keeping system can help you save time and cost as you don’t have to go through all financial records last-minute to meet deadlines. If you have a professional bookkeeper for your business, then a bookkeeper will be responsible for recording all the financial records for you so those records can be sent to the accountant for the lodgment of tax returns on your behalf.
6. Comply with Laws
Good record-keeping is important because it helps businesses comply with several laws in Australia. For this reason, company owners must hire a reliable bookkeeper to keep track of all business expenses and income. If you are looking for bookkeepers in Melbourne, then you can also search online. Bookkeepers are experts in managing business records, and they can provide these records to accountants during tax season.
The blog shares information on the importance of financial record-keeping for every business. No matter whether you have a small business or a large one, you need to have complete detail of every financial transaction. Having complete detail regarding business finances, you can easily make the right business decision. If you want to keep track of all your business records, expenses and income, you must take help from a reliable bookkeeper. For professional bookkeeping solutions for your company, you can also contact Reliable Bookkeeping Services provider.