To maintain the right posture of your business it is crucial to keep a tab on your finances, and bookkeeping is the best way of doing it. Bookkeeping is the process of recording all your company’s financial activities, typically by entering the data in bookkeeping software or a physical set of “books.” It precisely shows you the company’s expenses, source of revenue, and which tax deductions you’ll be able to claim. You can easily get free consultation services in the Netherlands to understand how to get started with the bookkeeping process and maintain your finances.
Bookkeeping assists you in preparing the budget for your company, creating tax reports, organizing your business, and much more. It is something you must not ignore if you want to keep your finances in order and prevent them from causing you any further issues.
Here are several other reasons why bookkeeping is essential for your company.
To file your taxes
To do your taxes, you must know your net profit, which requires you to understand your entire revenue and expenses. And the only method to be certain is to have precise, up-to-date books. A regularly updated record book has all the details pertaining to your company’s finances that enable you to file taxes on time.
To be aware of your expenses
Bookkeeping is said to be the best method to assess the financial health of your business since it helps keep your records organized and generate financial statements.
Are sales in your business increased? Are your transportation expenses exorbitantly expensive? Will you have enough money to handle payments next month? Is capital flow rising or dipping? The only way to know about all these queries is to start bookkeeping.
Saves you from tax penalties
The best method to keep track of tax deductions (expenses that you can take away from your taxable income) is to maintain an exact, up-to-date set of records.
The more data and supporting documents you can provide to your accountant at the time of filing tax returns, the more valid deductions you will be able to claim, and the larger your tax return will be. To be stress-free, you can always have your financial consultation services provider file the tax return with the Dutch Tax and Customs Administration in the Netherlands.
The Dutch Tax and Customs Administration also has quite strict recordkeeping requirements for any deductions you claim, so having your records in order can ease your stress if you are ever audited.
To get your loans sanctioned
You will need an updated record book to obtain a loan from a finance company or bank. Having your book in order, you can quickly produce your financial statements, typically required for obtaining a business loan, a line of credit from a bank, or seed funding.
Before lending or investing money, lenders and investors want to understand your company’s financial situation. They won’t be able to do so unless they investigate things like sales, cash flow, assets, and your business liabilities. For this, your lenders will look for your balance sheet, income statement, and summary of cash flows.
Enables you to identify errors quickly
If you think to settle or organize your financial transactions by the end of the year, you would hardly be able to spot if you or your bank made an error. You will have to bury yourself in papers at tax time. Organizing and revising your books on a regular basis can help you spot that incorrect overdraft fee today, rather than six months later when it’s too late to bring it up.
Now that you are aware of the reasons for starting bookkeeping for your business, the next thing you need to do is hire a customized bookkeeping service provider. The best one you rely on for the bookkeeping of your business is Mulbah Consultancy. They help maintain a robust financial administration. They work with the Process Control approach – a continual cycle of identifying, substantiating and mitigating risks in the financial processes.
Mulbah Consultancy also offers free consultation services in the Netherlands to help business owners understand their financial situations.