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2020/09/08

Bookkeeping: Why does it matter?

Tanvi Fal Dessai

Bookkeeping is vital for maintaining accurate financial records. Yet still, several organizations fail to implement this necessary process. Besides the fact you are required under the UAE law to retain your books of records for 5 years, doing this will also help you in business enhancement. 

Bookkeeping is the art of recording your financial facts so that it’s easy to see what cash is coming in and what you are spending.

For your enterprise to be successful, you need to balance the books every month; otherwise, you would possibly conflict with paying for things like stock, suppliers, or even your taxes.

It is a fantastic dependency you really need to be moving into from the very start of running your own enterprise.

If You are in a conflict with your bookkeeping, you should probably think of outsourcing it. Watch the video to know why bookkeeping really matters. 

You may not run your enterprise for very long without a sound understanding of your finances.

There may be numerous distinct taxes small groups need to pay throughout the year, and bookkeeping means you could successfully calculate how much is due. This enables you to prepare for the financial year in advance and allows you to think about your next moves, whether or not that’s growing your business or setting up a confined company.

Even if you have an accountant, they will still need you to hold on top of your bookkeeping, along with getting your invoices out and recording your expenses, as they genuinely can’t do their job without understanding your income and outgoings.

a few accountants will need you to record everything using online accounting software others will cope with your bookkeeping for you 

When your bookkeeping is in the right shape, your accountant can help you make tax-efficient choices consisting of how much to pay yourself, what enterprise structure is right for you, and whether or not you have to register for VAT.

It is also really worth remembering that if you dream of expanding your business, you’ll want to prove its profitability to investors, new partners, and banks. Proper bookkeeping practices can help you with this.

Still not convinced that your focus needs to be on bookkeeping? 

Here are the 4 main reasons why bookkeeping matters:

So you don’t miss deductions:

When it’s time to file your taxes for the year, your accountant will prepare your returns based on the information you provide. It’s essential to make sure you keep accurate records of your expenses and tax deductions, so you don’t overpay on taxes or miss out on getting back money in the form of a tax refund.  

Your accountant’s filings can only be as accurate as of the underlying data you provide. 

So you can see where your money is going:

You can’t expect to run a business well if the only bookkeeping method you have is looking at the bank balances. Your balances will show you money going in and out, but you can’t easily see which clients or jobs are the most profitable or worse – which jobs or clients could be losing you money. You can’t analyze how the new marketing campaign is impacting sales. You won’t see any of the outstanding money owed to your business and how long it’s been outstanding.

The bookkeeping process creates financial reports that can help you see much more data and a button’s literal click. Financial reporting can not only help you make decisions and projections; the reports can help you see if the changes are impacting the business.

So you can get a business loan:

 When you apply for a business loan, you’ll need to provide the bank with a laundry list of items, including some standard financial reports. They’ll usually want to see the last three years of reports. If you don’t have those records, it can be painful to try to piece together years of financial reporting, especially if you don’t have an accounting background. 

Even if you aren’t planning on taking out a loan or line of credit, Opportunities for expanding can pop up.

So you can spot banking errors quickly:

Reconciling your accounts on a regular, monthly basis helps check your records against the bank’s records. If you only reconcile your accounts at tax time, and you do find an error, you’ll find yourself in the unpleasant position of trying to fix a mistake that may have occurred many moons ago. Spotting and reporting these errors promptly can save you a lot of time and stress and not mention money.

You now know the cruciality of bookkeeping since it saves your note only time but also money and headache. If you find yourself needing to implement bookkeeping in UAE and struggling to tackle your bookkeeping yourself, think of outsourcing it and just starting now. Consider hiring a professional. Because waiting another day to implement bookkeeping is costing you, and you don’t know how much.

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