How good are you at keeping business records? If you are recoiling at the mere thought of it, you would have to change your ways if you want to develop a successful home run business.

When you are self employed you are responsible for sorting out your own tax and National Insurance. But there is no one looking over your shoulder to prompt you to get this done and keep records throughout the year. Once the old tax year ends you will receive notification from the tax office that you need to fill out a tax return. But after that you won’t hear a peep out of them until it’s time to submit it and pay your first chunk of tax at the end of January the following year.

Many business people – particularly those who are new to business – have come unstuck through not keeping up with paperwork and failing to realise how much tax they are due to pay. And this is precisely why you need to keep regular records so you know exactly where you stand with your business.

But it isn’t just the tax bill aspect that makes this so important. If someone was to ask you now how well your business was doing, could you honestly answer them? If you are sitting there among piles of work to be done you would think your business was quite healthy. It may well look that way, but if you don’t have any up to date records of income and expenditure your ideas may differ greatly from the reality of things.

Keeping records doesn’t have to be hard either. Provided you do it on a weekly – or even a daily – basis, you can easily keep up with what is required. And it isn’t just necessary for official purposes. You will find that you can run a better business through keeping thorough records for yourself.

For example, the tax office doesn’t need to know – nor does it care – how you find your new customers. But you should care, because if you know the answer you will be able to find more new customers more cheaply and quickly in the future.

Let’s say you advertise in two different places and get 20 new customers a month. You might think that is a good result. But if you keep accurate records you might well realise that 15 of those customers come from one of your adverts and just five from the other. And you pay exactly the same for each advert. This knowledge – knowledge which comes from keeping paperwork about this aspect of your business, will tell you that perhaps you could ditch the less successful ad and find somewhere else to advertise instead. This could lead to even better results in the future.

Complete and accurate financial records are a must, so always make the effort to keep whatever paperwork you need to have when you are running your own business. It can make a real difference to how successful you are in the long term.

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