A lot of people make the mistake of seeing bookkeeping as a chore and an obligation. They have to be done in order to fill out the annual tax return properly and generally keep track of things, but more than anything they are an inconvenience. As such, a lot of businesses just pass as many accounting tasks as possible over to their accountant and then try to forget them as far as possible without the risk of getting something seriously wrong.
However, your books can be a lot more than an obligation to HMRC. They can be a useful tool to help your business and improve the way it operates. With help from your accountant, your financial records can become a guidebook to your business’ performance, including hints of how to optimise, streamline, and tune up certain aspects.
Your bookkeeping records contain a guide to your business’ past performance, and this can be an invaluable tool for forecasting its performance in the future. Of course this isn’t infallible, as there are many other factors that come into the overall performance of a company in any given financial year, but it can still give some valuable indications about where your business is going and when it is likely to get there.
Most pertinently, records from previous years can be used to identify strong seasonal trends that tend to affect your business each year. This can help you better plan for the slower periods, and more effectively use resources gained through the strongest periods to keep your business healthy and running at full speed when business isn’t quite as abundant. Furthermore, knowing when your strongest trading periods are can help you think about the reasons behind the increased amount of business, and identify ways you might be able to fully capitalise on the opportunity – for example with targeted marketing campaigns.
Because many businesses are so good at paying only the minimum amount of attention to bookkeeping that they can without risking serious compliance issues, one of the main ways you can enhance your business through your books is simply to pay them more attention. Instead of just going over them in splurges, reconcile your incoming and outgoing transactions at least weekly and preferably daily.
This can make a significant difference to the way your business works. Minor expenses, which can build up to an appreciable amount over the whole tax year, are less likely to get missed. More to the point, errors can be often reconciled much more quickly and effectively when they are looked into very promptly than when you are trying to dig up the right information some weeks after things were paid up and filed away. This makes it easier to keep your cashflow optimised, your accounts error-free, and your business as a whole operating at peak efficiency with the minimum of wasted time chasing up errors and imbalances.