Recording business income and expenses correctly and frequently helps you to quickly find accurate information about the state of your business. This means you can make informed decisions about your operations.  

For example, you can identify sales trends. If sales peak or trough at a particular time you can analyse the cause. You could think about what’s happening when the sales are high. Where are the extra sales coming from? Are you doing something different? If so, can you do it again to improve business when sales are down?

You can do the same kind of analysis for the trough periods to identify situations or factors that you may be able to prevent or avoid.

Just as importantly, up-to-date and correctly kept records will make it quicker and easier for you to meet your reporting obligations. 

By contrast, incorrectly categorised records won’t give you accurate information about your business’s performance.

To benefit from accurately keeping records, it’s important to set up a record keeping system that suits your small business. This can be done with a digital record keeping system or a manual one.