Importance Of Keeping Accurate Financial Records

Whether you have a large business, a small business, or don’t have a business at all, maintaining accurate financial records are vital. Your financial records aren’t just something you pull out around tax time to make sure you know how much you either have to pay or will be getting back as a tax refund. Maintaining and regularly reviewing your financial records can help in a variety of different ways. 

Taxes and Audits

As mentioned, it can help when it comes to taxes. If you have maintained detailed records, it makes filing your taxes so much easier because everything is documented and all of the deductions and credits that you are using in your taxes are right there, easily accountable for, possibly lessening your tax liability and chances of getting audited. 

Audits are a lot less scary when you have accurate financial records. With those records, all the necessary documentation is right at your fingertips and saves time and resources. 

Fraud Prevention

While maintaining accurate financial records and keeping an eye on your financial records won’t necessarily prevent you from becoming a victim of fraud, it can help. If you are in the habit of keeping accurate financial records and regularly reviewing your books, it is a lot easier to notice any discrepancies, which can mean you notice the fraud quicker and are able to address it faster, as you try to fix the problem because you were able to catch it sooner, and hopefully before too much damage was done. 

Insurance for employee dishonesty can compliment your efforts by covering potential losses from fraud, which can allow a business to focus on maintaining integrity and stability, even if there is dishonesty present. If you would be interested in such insurance, reach out to Irvine Legal and we can get you in touch with people who can help you get insurance for employee dishonesty. 

Budgeting

Whether you like it or not, budgeting is a part of life. Looking over your financial records and understanding the ins and outs of money management can give you a more accurate picture of where your money is going and how you need to budget your money. Without proper records, the numbers you’re using are simply speculative and can be unreliable sources of information that don’t actually work. 

Decision Making

There are a lot of decisions to be made in life, whether it’s investing in projects, expanding your business, going on a vacation, or even something as small as whether you should eat out or not. When you have an accurate reflection of your finances you are better suited to make those decisions, and can help reduce the uncertainty that comes with those decisions and help with your confidence in the decision you made. 

Loans and Investors

If you are searching for a loan, or investors for your business, those records are going to be essential. If you have inaccurate or incomplete records, you can come across as a risk that they aren’t willing to be a part of, and you could lose out. 

Maintaining accurate financial records is a necessity for financial success and can help you not only survive, but thrive.