Reasons Why Everyone should Maintain Accounts
May 26, 2017
Bookkeeping a Day keeps Bankruptcy Away!
Not literally but it acts as a Red Signal Warning to where your finances are heading to. You may be Businessman, a Salaried Person, A Freelancer or even a home maker but you should maintain your accounts to manage and record your income and expenditures to track your last penny and manage fund efficiently. Profit and loss accounts and ledger should be maintained even in any format you like (if you are not regulated under any law to maintain books)
List of Basic Books
Ledger: A detailed records of all your receivable and payable
Profit and loss statement: A record of all of your revenues and expenditures
Invoice File: A file having all the bills you receive and all the bills you raise during a period
(Authors Note: You should maintain books for as long as you can maintain but for a minimum period of atleast 6 years as minimum period specified by various laws)
Here are Few Reasons to Maintain your books
Following careful record keeping procedures can also help you with tax returns and prevent fraud or theft. Using a good record keeping system will help you to:
- • Track expenses, debts and creditors
- • Apply for additional funding
- • Save time and accountancy costs
- • Pay tax, accurately and on time, avoiding penalties
- • Apply for and receive the correct amount of benefits or credits
- • Gives you the information you need to run your business and help it grow
- • Helps you plan for tax payments
- • Helps identify the strengths and weaknesses in your business
- • Helps manage changes and improvements in your business
- • Will help you plan to meet financial commitments such paying creditors or employees
• Helps to stay organized when dealing with customers and suppliers
• Makes it easier to get a bank loan or overdraft
• Avoids interest and penalties by making it easier to pay the right tax at the right time
• Will support your claims to some tax reliefs or capital allowances.
Producing invoices, quotations and estimates promptly is vital.
An early estimate can be the difference between winning and losing a job. Similarly do not rely on supplier’s statements. You need to know before they tell you how much you owe.
Makes it possible to find important information and documents quickly
• Is someone disputing your invoice?
By being organized you can quickly and easily find information regarding the original order and the goods and work supplied.
• Yes, banks like it when you seek an overdraft for the right reason and at the right time. Don’t wait until you need one to ask for it.
• Penalties are here to stay!!! But we are here to avoid them. By the time a deadline comes everything will be filed and in good order.
What are capital allowances?
They are provisions that can save you a lot of tax when you purchase equipment or similar assets. Don’t miss out on the opportunity just because you have lost the paperwork.
Summary
So, No matter what your occupation of work profile is ,you see that it’s very important to keep good accounting record, even a simple ledger and a profit and loss statement along with all documents for easy tracking and managing of your last penny efficiently
Can you think of any other reasons why it’s important?
Please add to the list and share your experiences in the comments below
Disclaimer
ABove shared views are Personal Views of author and he hold NO responsibility of any information provided or any authenticity or validation or of any damamge harm caused due to such information. Discretion of reader and apllication of reders own mind is highly advised.
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