IMPORTANCE OF KEEPING ACCOUNTING RECORDS AS AN ENTREPRENEUR

By Petros Piki, CA(Z), MSc

Entrepreneurs face a number of challenges and issues of importance. One very important aspect is record keeping. Not only is it an issue of legal compliance but it is also an issue of management. Accounting records being all of the documentation and books involved in the preparation of financial statements or records relevant to audits and financial reviews. They also include records of assets and liabilities, monetary transactions, ledgers, journals, and any supporting documents such as quotations, invoices, contracts and even emails.

Regulatory Compliance

The law requires accounting records to be maintained for several years and these records for certain companies may be required to be kept for public inspection. Regulatory bodies like the revenue authority have a legal right to access these records with or without notice.

Tax Compliance Issues

One of the issues that will definitely come up like the rising of the sun is payment of taxes. Tax issues is a fact based and evidence-based discipline. One cannot claim an expense that does not have documentary evidence neither can a business claim an allowance, a rebate, or an exemption for that matter without legit supporting documents. Most businesses despite them being clearly define are missing on capital allowances albeit them being there to give the entrepreneurs relief on their tax payments because of their investment in capital and assets. Making claims without the evidence may result in penalties that can actually lead to demise of the start-up.

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Easier and Cheaper Accounting Work

As accountants at Neverlank we give our customers great accounting services but entrepreneurs need to understand that getting accounting services when paperwork is in shambles is more costly. Professionals charge on time so when somebody is helping but the documentation is not there the process will be longer and costly.

Supporting Future Fund-Raising Initiatives

Most business people do not realise that they will need the historical information to support their future pitch for funding. A funder always wants to understand how the business performed in the past before looking at potential future trajectory. Keep the information you will need it for future capital raising pitches.

Proper Running of Business and Referencing

Documents are also important for future referencing of certain transactions. In cases of disputes and legal battles keeping your accounting records may prove to be very handy. Not only is it proof it may also be reference for structuring future transactions. Historical information may also be important in quoting customers and negotiate for services and goods in the future.

Preparation of Management Accounts and Operational Reports

Accounting records are also important in preparation of management accounts and management reports. You need to understand how the business is actually performing for proper decision making and strategy making. The better your information the better the decisions you make. Poor records mean poor decisions.

In conclusion keeping accounting records though can be seen as a pain is actually a great initiative in running sustainable business. It is easier to scale your business when you really understand your business. With incomplete records your understanding of your business is not complete.

Neverlank offers business world class accounting services. When your business is small it maybe a big expense to engage a qualified Chartered Accountant to help with your books. We offer small business that privilege and more. Call 0718110832