No matter the size of your business, it is extremely important for you to keep financial records, for several reasons:
- Gives you an idea of where your business stands financially
Keeping track of your business’ finances helps you identify your business’ financial position at each stage, be it monthly, quarterly or annually. At the end of each business day, how much money has your business made or lost? These are some important areas good financial records help you to cover. Not having an idea of your financial stance virtually leads you to operate blindly as you cannot tell whether you are making any profit or whether your business’ finances are growing or declining.
- Helps you identify what is draining your finances
Tracking your finances helps you to clearly identify where there are loopholes and what can be done in response. Is your financial strategy working for your business? Are there any new measures to be adopted or old ones to be changed? Financial records help you to answer such questions and makes your business a progressive one.
- Gives you credibility when approaching potential lenders
Financial records of your business makes it easier for you to approach potential investors or lenders. One of the first documents requested by potential lenders is your business’ financial records, as this gives them insight into your business’ financial activities and makes your business transparent. Keeping track of your finances gives you the credibility you need and in turn helps you get the best interest rate for your business.
- Helps you in fulfilling your tax obligations
Every business in Ghana is required to meet its tax obligations such as corporate tax (taxes paid by companies on their profits annually) and personal income tax (for self-employed persons). There are different tax forms that require financial information in order to be correctly filled (https://gra.gov.gh/index.php/forms/ ). Keeping good financial records helps in determining how much tax you actually have to pay, in order to stay in business.
- Helps in reducing fraudulent activities
Imagine your business never kept any financial records. Not only will it be easy to channel finances into the wrong area, it will also make it very difficult to hold staff accountable for any of their actions that affect the business’ finances. Keeping financial records helps you keep an eye on business activities in order to keep the incidence of fraud as minimal as possible. Adopting a strict financial record keeping system for your business also helps to keep you and your staff on your toes.
If you are overwhelmed with other business functions, you could consider the option of hiring a book keeper (or accountant) to help keep accurate financial records. In the meantime, here are a few tools to help you in keeping track of your business’ finances.