The Importance of Good Bookkeeping for Busy Business Owners

For busy business owners, bookkeeping is a necessary burden and often the last thing on your mind. But it’s vital.

Good bookkeeping not only gives you an exact and up to date overview of where your business is, it also helps you to budget and even plan where your business is going.

And it shouldn’t cost you time, but save it.

Written from the perspective of Kim De Almeida, a Director of The Uncommon Practice, this short article outlines the importance of good bookkeeping for business owners…

The other day I was in the bad books for a missing receipt of £4.38!

If you’re like me, bookkeeping is the last thing on your mind. But it’s vital.

After an SOS trip to the garage to buy milk before a board meeting – a top priority! – I nipped in, grabbed the only milk on the shelf and paid with my business card.

I forgot the receipt initially and had to run back in to ask for a copy as I knew my business partner would need it.

Stuffing the receipt in my glove box for safe keeping, I drove off and never thought about it again, until I was reminded to find it!

Why is bookkeeping so important?

Whatever your business, keeping your income and expenses organised properly not only gives you an exact and up to date overview of where your business is, it also helps you to budget and even plan where your business is going.

It’s important to note that bookkeeping and accounting are not the same thing.

They share common goals, but support your business at different parts of the financial cycle.

Bookkeeping is about recording financial transactions while accounting is much more subjective, supplying insight to your business. Accounting uses the information provided by bookkeeping.

Now let’s bring VAT into this mix.

Depending on your VAT scheme, most registered businesses will need to submit a VAT return every few months, detailing and keeping evidence of all VAT charged and paid during that period.

Bookkeeping is essential to keep up with these requirements.

£4.38 on milk would not be essential in this scenario, but let’s pretend that the receipt was for a computer and was for £1700.

That missing receipt would be used to declare the VAT paid on the computer purchase and enable you to reclaim 20% VAT, not to mention the ability to declare the purchase in your yearend accounts.

Keeping on top of bookkeeping makes business sense.

What doesn’t make sense is searching for a receipt for £4.38.

Good bookkeeping shouldn’t cost you time, but it will definitely save you time. 

As a Company Director, I have an app on my phone that allows me to take a picture of all my receipts and upload them into our bookkeeping software, so that our bookkeepers have all the paperwork they need to keep our business in order. I should have used this as soon as I left the petrol station!

So, if you’re struggling to keep on top of your records, do not put it off any longer.

Get help from a bookkeeper like The Uncommon Practice and free up your time so that you can focus on what brings most value to your business.

Don’t waste any more time looking for receipts that have been stored in that safe place you just can’t remember. I even looked in the fridge because, well, you never know….