13 Mar The Importance of Accurate Bookkeeping
Accurate bookkeeping is vital for every business and with the development of online cloud based software, it is now possible to achieve a level of automation and real time reporting to improve the efficiency of your business. Nevertheless, our research shows that a number of business owners lack the discipline to keep accurate records, resulting in lengthy reconciliations and additional accountancy fees. This brief blog will highlight the benefits of keeping accurate books, as well as some hints and tips which will save you time and reduce end of year accountancy fees.
It is estimated that HMRC issued fines in excess of £800 million during the 2018/19 tax year and whilst it’s encouraging to see a reduction in late filing penalties, the total value of the fines did increase by a reported 32%. It is largely understood that an increasing number of fines are a result of the adoption of software, enabling HMRC to automatically check reported tax returns swiftly, identifying inconsistencies for further investigation. A process that was previously very time consuming has now benefited from automation. The majority of investigated inconsistencies are not deliberate or ill intended, but result from a misunderstanding or a failure to keep accurate records. Therefore, keeping accurate books has never been so important in minimising the risk of error and inconsistencies, but more importantly accurate books will enable informed decision making.
Nevertheless, on a daily basis we talk to business owners who are stressed about filing deadlines, surprised by year tax obligations, and ill informed as to the general health and performance of their business, all of which can be avoided by accurate and timely bookkeeping.
For many small businesses, bookkeeping systems range from shoe boxes to spreadsheets and depending on the complexity and scale of the business, many of these systems work. However, a number of HMRC approved software packages are now, not only available, but also affordable for all businesses, regardless of size. With a move to make tax digital, in addition to the obvious governance benefits, most online accounting software packages offer benefits beyond the numbers, as they will also aid to improving the efficiency of your business.
The benefits of online accounting software;
- Connect to your accountancy software to your bank accounts
- Ease of bank account reconciliation
- Create online quotations and estimates
- Create online invoices and track payment performance
- Create online purchase to save time and improved governance
- Management of expenses for employees and projects
- The ability to create an integrated eco-system of business systems
The benefit of accurate bookkeeping is clear and with the continued development of online accounting software, now more than ever, it is more accessible. The ability to have real-time information on the health and performance of your business, at least from a financial perspective, will change the conversation with your accountant, coach or mentor, allowing you to look beyond the numbers, for timely and pro-actively adjustment.
It is important to note that the adoption of online accounting software will not replace the need for a trusted accountant, a vital member your business team, but it will improve accuracy and free up the time required to focus on the growth of your business. It’s time to change the conversation with your accountant.
How can we help – As a Xero Partner Practice, Bright Trees work with Xero, an online accounting software that lets you input, access and keep an eye on your financial information wherever you are. Xero is very easy to use whether you’re just starting on accounting software or you’re switching from a different product. Our certified advisors can help you to get set up and put a process in place to make your bookkeeping a breeze. Bright Trees work in partnership with a trusted network of accredited accountants, supporting you and your business to ensure that accurate records are maintained. At Bright Trees we offer a number of bookkeeping support packages with the tools to take care of the numbers, so you can focus on building your business.
If you want to maximise the full potential of your business and achieve the growth that you desire, then please do get in touch.