The short answer is 'yes'. With strong, professional bookkeeping processes a business is able to make financially viable buisness decisions, be tax compliant, increase cash flow and get the most value from their accountant.
Keeping accurate and up to date accounting records in a financial system allows you to ensure your transactions are correctly coded for GST compliance and ensure your annual tax returns are correct. Financial systems such as Xero allow you to be free of paper-based receipts stapled to pieces of paper, invoices lost in emails or printed out and bank statements kept in files. Your documents are kept in one place for future reference and on hand if you are audited. GST return filing within Xero and a direct link to IRD allow for easy filing and cut down on errors caused by spreadsheets and manual calculations. Xero will account for any prior adjustments in your next GST return, and you will always up to date. Reconciling your GST on a regular basis will give you confidence you are tax compliant. As mentioned, if you are ever audited, there will be a clear audit trail of your transactions.
Improved Cash Flow
By ensuring you invoice regularly and in a professional manner your clients will perceive you as being on top of your business and will trust your bill is correct as on time and clear. Professional documentation is taken seriously, and clear payment terms means there is no argument as to whether a bill is overdue or not. Regular bank reconciliations will ensure you know who has yet to pay and can be chased up by a statement or friendly reminder.
Having your supplier invoices loaded for payment on a daily or weekly basis will allow you to pay in batches regularly. Being to date with payments means you will not be hit with an unknown bill due to a paper invoice lying around or an invoice sitting in your inbox. Time is also gained back when you do not have to find those unpaid invoices and work through queries.
Good business decision making
Clear financial insight along with strong cashflow reporting allows you to accurately forecast out ahead of time and make the right decisions. This may be purchasing a large capital expenditure item, hire a new employee or push for more sales. If your accounts are up to date within a financial system such as Xero, your numbers are at your fingertips. Up to date accounts will allow you to report on GST owing to date and savings are able to be put away into a separate account to ensure taxes are paid on time without an hindering your ability to operate.
Get the best from your accountant
When it comes to GST due or your annual tax return, the more up to date and accurate information on hand will mean your accountant is able to spend time on what they are invaluable for – business planning and tax advice. This is what will really make a difference to you and your business. Focus will be on how your accountant can help you move forward and be more profitable, rather than recoding errors or chasing up missing documentation.