Table of Contents
Keeping accurate business records is vital if you want to keep your business running efficiently. If your records are inaccurate, you could encounter any number of problems: incorrect financial forecasts, budgets being set too high or low, even a government audit. As such, you should always maintain your business records so they are of a high standard.
In this article, you’ll learn:
- How to identify the business records you should keep
- How to maintain accurate business records
- How to keep your financial records accurate on a daily basis
How to identifying the business records you should keep
Most businesses will keep records of each product or service they sell. This means tracking both the number of sales and the kinds of items they’re selling. Having this information helps measure the business’s success and identify what products or services are most popular.
Invoices and copies of customer receipts are usually the best documents to keep as a record of a sale. Incoming transactions on your financial account also work as evidence, but you must ensure that the income is from a sale and not another kind of income like a grant or outside investment.
Business expenses are one of the most important records to keep, as they have a huge impact on the taxes you pay. This is because you only need to pay taxes on profits, so you can deduct any purchases you make that are entirely related to running your company from your tax bill. For instance: if your income is £40,000 and you claim £10,000 worth of expenses, you will only have to pay tax on £30,000 of your earnings.
Records of expenses might be receipts, purchase orders, or invoices from outside companies. If these come as physical documents, it can be a hassle to store and organise them. If you use Countingup, you can avoid this using their receipt capture tool.
Countingup is a two-in-one business account with built-in accounting software. The receipt capture feature lets you take a photo of any paper receipts you receive and attach them to the related transaction in your Countingup account. This keeps all your records entirely digital, which makes them much easier to store and organise.
Documents of ownership
Another business record that you may want to keep is any documents of ownership. You’ll likely have these for any large assets within your business, such as property or vehicles. Examples of ownership documents include property deeds and sales receipts.
For vehicles, you’ll want to have a logbook or V5C to prove you are the registered keeper of your vehicle. Although this is not proof of ownership, it is proof that you are responsible for the car, truck, or lorry in question.
The information you’ll want to maintain the accuracy of on these documents is the date you purchased the asset and the amount you paid for it. Both impact the depreciation of the asset, which is how much value it loses over time.
How to maintain accurate business records
Set aside time for checking your records
Maintaining your business records isn’t something you only need to do once. You’ll need to work at it constantly, as your company will create new data almost every day.
It’s smart to set aside a specific time to organise your documents and digital files if you’re trying to stay ahead of this constant flow of information. Most businesses work on a monthly cycle, so re-examining and tidying all of your records at the end of each month is a good start.
If you’d like to set time aside to check the accuracy of your records but find that you have no spare time available, you might want to look into improving your time management. As error-free records are essential for a successful business, consider rescheduling other tasks to spend time organising your business records.
To reduce the time you need to check your records, consider using the Countingup app. Its receipt capture feature allows you to digitise and store any paper receipts you receive, which cuts down on the time you might need to spend filing physical records.
Countingup also has automatic expense categorisation, which means any transactions made on the app are automatically put into HMRC-approved categories — you don’t need to waste hours creating your own categories and placing different expenses in each.
Avoid using cash
Using cash to run your business requires excellent bookkeeping, plus a variety of systems to track how much cash you receive and when you’ll deposit it into your financial accounts. A much easier way to operate is by focusing on digital transactions.
These transactions are much easier to keep accurate records of, as most forms of digital payment will register somewhere as soon as a customer makes them. For instance, electronic bank transfers will appear on the accounts of the payee and the recipient, and the device you use to take a card payment will log that payment automatically.
Hire a professional
It might be that you’ve not checked your records for a long time, and when you finally do, they are far too disorganised and inaccurate to fix. In this case, you might need to seek out the help of someone with more financial training than yourself, like an accountant.
If you’re trying to find an accountant for your business, make sure you approach a variety of accountants and find the right person. It’s also wise to confirm all of their qualifications before you hire them.
An accountant is perfect for organising your records, particularly those related to your finances. They’ll know exactly what you need to do to fix your records and advise you on keeping your records correct going forward. Hiring an accountant to sort your records will also save you a lot of time, which you can then spend doing other jobs.
How to keep your financial records accurate on a daily basis
Digital records are much easier to keep accurate, so one of the best ways to ensure reliable records is to use a business account, such as Countingup.
Countingup’s main features all use digital documents and help with much more than just maintaining accurate records. For example, the app’s invoicing system allows you to create and send digital invoices with just a few taps. You can also keep track of paid and unpaid invoices better with invoice matching, which allows you to match payments to the appropriate invoice.
Countingup’s expense categorisation, as we mentioned above, puts all your expenses into different categories to keep your records organised. On top of that, it can help with your Self-Assessment Tax Return: as all the categories are HMRC approved, filing your return is as simple as copying the information from the app onto the HMRC form.
The receipt capture tool in the Countingup app reminds you to photograph each paper receipt you get, to make sure you have a digital copy. You can also match these photos with payments, so you know exactly how much you spent and where.
Finally, Countingup’s real-time profit and loss reporting are great for tracking your finances and logging your income. This feature means getting up-to-date financial records is as simple as opening up an app.
Click here to start your three-month free trial today.