Bookkeeping is the process of keeping your company’s financial records. Hiring a bookkeeping company is an essential part of running a business and can make or break your business, depending on how well it’s done. However, many small businesses are choosing not to have their books managed by a bookkeeper at all, because they think that it will hurt their profits. We’ll take a look at why you must not avoid bookkeeping.
It shrinks your business.
If you don’t keep good records of your business, it becomes harder to run it. You can’t make informed decisions about your business and plan for the future with any confidence. Without accurate financial information, you’ll be left guessing at how much money is coming in and going out each month—and if there isn’t enough money coming in, then there won’t be enough left over at the end of the year so that employees can pay their wages on time (and get bonuses).
It prevents growth.
When companies aren’t able to keep track of how much they’re making or spending on things like advertising campaigns or new equipment purchases (which may happen only once every few years), they’re likely not going anywhere fast!
It hurts your credit rating.
If you are a business owner, keeping your books up to date is important for a number of reasons. But one of the most obvious benefits is that it keeps your credit rating in good shape. The reason behind this is simple: if you don’t keep records of what you owe, no one can tell whether or not it’s true.
You lose valuable tax reliefs.
Bookkeeping is a crucial part of running your business. It keeps track of the money you earn, how it’s spent and where, who was involved in each transaction, and when everything happened. You need bookkeeping software to keep these records up-to-date so that you can see at a glance how much profit or loss has been made since your last accounting period ended.
However, many small businesses don’t bother with this vital task because they’re afraid that having their books audited by an accountant would bring unwanted attention from tax authorities—and who wants trouble?
While this may be true for some types of small businesses (such as restaurants), most people don’t realize just how important bookkeeping is for all types of businesses: even those who have no intention of paying Corporate tax should have proper records just in case something unexpected happens down the road!
Fines and penalties could wipe out your profits.
If you don’t keep accurate records just like management accounting, you could be fined or penalized. For example, if your business is audited and it turns out that you’ve been missing some information about your sales and expenses for the past three years, it will be difficult for them to give their approval.
The disadvantages of avoiding bookkeeping for your business can easily outweigh the advantages.
- Risk of losing out on tax reliefs.
- Risk of losing out on valuable time.
- Risk of losing out on valuable information.
- Risk of losing out on valuable money
Conclusion
When you keep track of your finances, it’s important to make sure that you understand how the numbers will affect your business. It can be difficult to keep up with all these different types of taxes, fines and penalties but if you take the right decision if outsourcing it and get it done regularly just like Dubai accounting services this will be an easy task.