3 Advantages of keeping your company’s accounting up to date
Depending on the point of view from which you look at it, your company’s accounting can be a means or an end :
- With the data obtained from it, tax returns are prepared. Therefore it is a means to comply with the obligations with the Treasury conveniently.
- It is also an end in itself because it offers all the information regarding the operation of the company.
But both in one case and another, the idea is to keep it as up-to-date as possible.
However, it is very common to be aware of invoices, post them for quarterly statements and forget that in accounting there is more data than that, for example:
- Everything related to the treasury: collections and payments made by bank or in cash
- Personnel and social security expenses.
- Interest and other financial expenses.
Without this information, your company’s accounting cannot be completed, and it is when it is complete and up-to-date that you can really take advantage of it.
The advantages of keeping it as up-to-date as possible are multiple. Here I tell you 3:
[Explanatory note: Companies are obliged to keep accounts in accordance with the Commercial Code, an obligation that does not affect individuals. However, the fact that a freelancer only has to keep a few record books does not imply that it is not highly recommended to keep a more complex accounting.
1.- You will be able to make decisions that will affect the “tax bill” for the year.
The fundamental data that most interests the employer is the profit or loss of the activity: depending on its amount, it will have to pay more or less.
The taxes levied on the benefit are settled 6 months after the end of the year, both the Corporation Tax and the Personal Income Tax (for the self-employed).
However, if the data is analyzed with enough time before the end of the year, decisions can be made that affect that taxation:
- For example, if you had planned to make certain expenses later, they can be advanced to this exercise in order to reduce taxation.
- It is also interesting to close a sale operation at the beginning of the following year and thus not increase the progressivity of the tax in the current year.
And at least, it will serve to know in advance the amount that will be paid later, which is important to be able to make treasury forecasts.
2.- You will be able to know at all times what you are owed and what you owe.
It is very common for small business owners to mentally carry their business numbers.
What if?
Broadly speaking, not in detail, but almost everyone knows, fairly roughly, how much they have to pay and how much “they have on the street” .
However, “carrying so much on your head” has major drawbacks: mental fatigue, stress, and memory lapses.
Now, if your company’s accounting is up-to-date, just by pressing a key on the computer you will be able to know exactly:
- What you have to pay exactly and to whom: suppliers, finances, social security, the bank that made you the loan, workers, …
- What exactly they owe you and who: clients, finances, other debtors …
- Or, for example, the amount of VAT paid at any time in the quarter.
All this is of great help because you will be able to make treasury forecasts with great precision. And, of course, clearing your mind, which is priceless …
3.- You will keep your advisor happy.
Yes…
If you provide your advisor with the details well in advance, they will be very, very happy to have you as a client.
And this is not a joke: what any professional wants is to offer the best possible service to his client and that he is happy with his work.
Therefore, by being able to work more comfortably:
- You will make fewer mistakes by being able to spend more time on your data (this interests you too).
Keep in mind that if any of the clients of the consultancy deliver on the 19th the documentation to make the quarterly declarations that expire on the 20th, you will tell me the time that you can dedicate to each company … - It will be able to serve you better.
Having the updated data, it will be able to provide you with the reports you need and that will serve you, as we have said before, to make decisions and make forecasts. - It will include you in the list of favorite clients, which I am sure they have in all the consultancies in the world
You see, keeping your company’s accounting up to date is all advantages, whether the Accounting Bookkeeping Service is carried out internally or if it is handled by an external advisor.
