RECORD KEEPING AND BOOKKEEPING NUGGETS FOR BUSINESSES
There are many sound reasons why business owners should keep accurate business records. Accurate records allows business owners to;
- Be in better control of their business by helping with financial planning and decision making;
- Portray a more professional image that makes it easier to deal with their bank;
- Have appropriate records which enable an individual to file an accurate profits tax return;
- Have lower compliance costs;
- Easily detect losses and theft in your business.
- Efficient record keeping and bookkeeping will save you time and money in the long run.
The following tips could help improve the efficiency of your bookkeeping process:
- Make bookkeeping part of your regular routine. Once you’ve established a routine, you’ll find that you work through your books more quickly
- Keep your bookkeeping up to date
- Keep your books in an organized manner - you’ll work quicker if you can easily access the information you need
- Look for ways to improve your bookkeeping
- Don’t leave things until the last minute.
Retention of Your Records
Don’t forget that having taken the time and effort to prepare your business records, you must keep them for at least seven years after the date of the transactions concerned. Even after you cease trading, your record keeping obligations continue until the seven-year period has expired. However, it is pertinent to know the difference between important and necessary documents, and those documents that are not important.
Do not make a lifestyle out of keeping unnecessary documents, because it will actually make futile the essence of having a record-keeping process or system. You should know the important and necessary documents that need `to be at arm’s length, you should know the important but not necessary documents you need to archive in a designated location, and you should also know neither necessary nor important documents of files you need to shred or incinerate.
Records That Must be kept by All Businesses
Irrespective of the sort of business you operate, you must keep sufficient records to enable the assessable profits of your business to be readily ascertained. To confirm your calculations, your business records must include;
- The books of account recording receipts and payments, or income and expenditure;
- The underlying documentation necessary to verify the entries in the books of account; such as vouchers, bank statements, invoices, receipts and other relevant papers;
- A record of the assets and liabilities of your business;
- A day by day record of all sums of money received and expended by your trade, profession or business together with supporting details of the receipts or payments;
- You must also keep records relating to all your business assets and liabilities at the end of each year, like the debtors and creditors’ list;
How to Keep your Records
· The paper-based method
Paper-based record keeping simply means keeping all your invoices for sales and for purchases as well as all your cheque butts, copies of your bank deposit slips and bank statements. These will form the basis of the entries in your cash book. When you use the paper-based method of bookkeeping you must make sure you keep all your records in a legible and well-organized manner.
· The Digital based method
Another way of keeping records is by using a computer. Nowadays, evolving businesses carry out their businesses by leveraging on technology and its provisions to help record their business transactions and keep all records. Depending on the type and size of your business, using a computer can simplify and improve your record keeping.