Bookkeeping is often treated as an admin task to catch up on at year end. In reality it is the foundation every good business decision is built on. When your books are accurate and up to date, you know exactly where your business stands.
You can see your real cash position
Profit and cash are not the same thing. A business can be profitable on paper and still run out of cash because customers pay late or stock ties up money. Monthly bookkeeping, with bank reconciliations, shows what is actually in the bank, who owes you and what you owe.
It keeps you compliant with SARS
Accurate records make income tax, provisional tax, VAT and payroll submissions straightforward. They also mean you can answer a SARS query or verification quickly, with documents ready. Businesses generally need to keep their records for five years, so organised bookkeeping saves time and stress later.
It opens the door to funding
Banks, investors and funding programmes all ask for financial statements and management accounts. A business with clean books can apply quickly and present a credible picture. One without them often loses the opportunity.
It helps you price and plan
When you know your real costs, you can price your products and services properly, spot expenses that are creeping up, and set a realistic budget for the year ahead.
Five habits of businesses with healthy books
- Keep business and personal bank accounts completely separate.
- Capture transactions every week, not once a year.
- Reconcile every bank account at the end of each month.
- Keep a digital copy of every invoice and receipt.
- Use cloud accounting software, such as Sage, so your accountant can work from the same live numbers.