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As a business owner there's always the possibility that things might not go according to plan. While no one can predict the future, you can make preparations to ensure that when the unexpected happens you are in the best position possible to mitigate any potential fallout.
Bookkeeping is essential to ensuring you have a clear and concise record of your business dealings. If your company needs to be investigated or audited, bookkeeping will play an important role in providing relevant information and proof about how your business operates. Payroll, cash flow, VAT returns, and sales and purchase ledgers will all be under scrutiny. Therefore, it is crucial that your bookkeeping records are always well maintained and accurate.
There is a variety of reasons why a company might need to be investigated or audited. These include:
HMRC tax investigations can be expensive and time-consuming affairs. On average, an HMRC audit can take approximately 12-18 months to complete. Providing HMRC with inaccurate returns, incorrect figures that aren't in line with industry standards and numbers which fluctuate by large margins are some reasons that might result in a request for an audit. However, HMRC will also contact companies at random to undertake an audit. Therefore, it is wise to ensure that your bookkeeping processes are watertight. This will help you to streamline the process and avoid potential difficulties that could arise if books aren't properly maintained.
Should your company be unfortunate enough to fall foul of suspected fraudulent activity or become part of a legal dispute then it might need to undergo an investigation for legal purposes. The quality of your bookkeeping records will be pivotal evidence for refuting and justifying claims made about a company's activity.
However, it isn't just unsavoury situations that will result in a company being investigated. Should you wish to sell your business, or offer shares in the future then your accounts, including the company's books, will need to be studied carefully to ascertain an accurate value. Maintaining your bookkeeping is therefore an essential and necessary tool, which will prove to be invaluable to your business in the long term.
While smaller companies might not be able to justify employing a permanent in-house bookkeeper, outsourcing the services to a professional agency, like AMR Bookkeeping Solutions, will ensure your business records are always accurate and up to date.
Here at AMR we are experts at helping businesses of all sizes with their bookkeeping requirements. If you have any questions about the contents of this blog, or you need professional bookkeeping advice, our friendly team will be happy to assist you. Get in touch and find out how we can help you and your business.