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The Need to Keep Financial Records of Your Business

how to keep financial records

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The Need to Keep Financial Records of Your Business

Startups and small businesses in Ghana, Nigeria, Kenya and other countries in Africa are not fond of keeping financial records. It is a problem that has several causes but many of them I have come to realize are not compelling enough to relegate the important role of keeping accurate financial records.

The Bad

I have interacted with many small-scale businesses in Accra, the capital of Ghana and have found some of the reasons why they do not keep financial records for the businesses they run.

  1. Entrepreneurs do not appreciate the importance of keeping financial records
  2. Business owners who realize its importance said they do not have the book keeping skills
  3. They said their businesses are too small to hire professional accountants
  4. Cost of hiring professional accountants or even book-keepers is too high for them
  5. They are unaware of any regulatory or legal requirements to keep financial records, even for tax purposes
  6. They are not accountable to anyone but themselves, hence no need for accounting
  7. Keeping records does not bring immediate or tangible benefits to their business. No cash inflow.

The Good

Here are very good reasons why you should keep accurate financial records of your business, no matter the size of the business.

  1. Keeping financial records provides a picture of your business at a glance
  2. It keeps you in control of your business because it tells you lagging areas where you need to put in more efforts
  3. Measure of performance. The only way you know how your business is performing is through accurate financial statements, and not by looking at your bank statement as most do
  4. Financial records provide a history of your business. You may not be able recollect everything about your business, and that’s why you have to record them
  5. It is this accurate and regular financial records that banks and investors rely upon to provide you with the funding that your business requires
  6. Keeping financial records help your business to pay the correct amount of taxes without being cheated or without cheating the government
  7. Financial records help you to quickly identify and track your business assets, liabilities, incomes and expenses.

 

Financial records enable you to check the financial health of your business –a very important aspect of every business.

So don’t delay in getting the financial health of your business checked. Contact me if you need help or drop a comment in the comment box. Share this article with your friends as well.

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