We all have things that we put off doing because we don't enjoy doing them. In truth though once the task is completed there is often a sense of satisfaction and achievement in completing it.
For me it is getting up early to go to the gym, but once I am up and there I am glad that I made the effort and start the day on a positive feeling that I have already achieved something. Often the thought of doing something can be worse than actually doing it in the first place. The more that something is put off the bigger it becomes.
For many the thought of keeping and maintaining their records has the same effect. As the thought of maintaining your records is often worse than actually maintaining them I thought I would explain the benefits of setting aside just one hour a week to keep them updated:
1. Your memory is still fresh
By setting aside an hour a week you are actively staying on top of your record keeping and therefore you are more likely to recall your recent transactions and where you have been. This helps to ensure that you claim all expenses that you are eligible to claim, for example that travel expense, or postage receipt.
2. Receipts are less likely to be mislaid
We've all been handed receipts and without thinking drop it in the bottom of our bag or our coat pockets for it never to be seen again. By spending an hour a week sorting through your records, you are more likely to remember that receipt and stand a better chance of allocating it. This makes it easier when trying to prepare your year end accounts as you won't have to spend time hunting down receipts for transactions that potentially occurred a year and nine months prior.
3. It will reduce your tax
In order to claim an expense you need to be able to prove to HMRC that it occurred and that it was a legitimate business expense - you need a receipt! Therefore by spending an hour a week gathering your receipts and records means that they are less likely to go astray and therefore reduce your tax.
4. It will enable you to see accurately how your business is performing
If you haven't allocated time throughout the year to gather your records then when it comes to your year end it is likely that you shall spend your time frantically gathering what you can for handing over to your accountant. Not only is this stressful for you it is likely that receipts shall be missed or lost. If the transaction was paid for through a business bank account then the accountant is likely to query it increasing their fees or if it was paid via cash then it is likely to go undetected. Not only will this effect the amount of tax that you have to pay but it also distorts how your business is performing as business transactions are not being recorded. This can have a substantial impact on your business, particularly if you are starting out or looking to expand. It is therefore essential to set aside time, one hour a week, to stay on top of and maintain your records.
Ashored can help to support you and your business with its bookkeeping and accountancy requirements.