Simplifying Life Insurance in India
Know How to Organise Your Financial Records
Even if organising financial data isn't the most enjoyable thing to do, the benefits are worthwhile. With well-organised records, you can locate papers quickly, handle tax disputes with assurance, prove ownership of certain assets, maybe save money on taxes (such as through capital gains tax evaluations), and, if necessary, enlist the assistance of others to handle your financial affairs.
Here, we are going to know why you need to organise your financial records and the ways to do so. Continue reading to know more about the same.
What Are Financial Records?
What Is the Importance of Maintaining Financial Records?
Maintaining the financial records is necessary because of the following reasons:
- Monitor Your Organisational Activities: If your company is expanding at a healthy rate, physical records, such as financial statements, sales purchase reports and audit books, can demonstrate this. It offers a window of genuine verification that enables you to find the gaps and helps you to create business policies that are focused on the market. In other words, it raises the possibility of corporate success.
- Make Genuine Financial Statements: Having complete access to numerous business documents, including balance sheets, profit and loss statements and other accounting records, can be easily done by a reliable record management system. In order to create accurate financial statements, these records are beneficial.
For instance:
- Statements of income and expenses, for example, reflect the organisation's overall profit and costs during the specified time period.
- On the other hand, complicated accounting records, such as balance sheets, act as the most reliable evidence of your actual legal assets, obligations, and equity during a specific time period.
- Identity for Your Income Sources: Many different income sources are used to generate financial and material benefits for all types of commercial and non-profit organisations. Income sources are useful while differentiating between business and non-business receipts and taxable and non-taxable income. You may find and validate these sources of revenue with the highest level of precision with the use of modern document archiving technologies.
- Track the Deductible Expenses: Systematically organising financial documents can assist you in tracking every expense you have incurred for your company. In case you do not properly record your expenses, you risk losing or misplacing them. Additionally, it can create several issues while filling out yearly tax returns.
What Are the Different Ways to Organise Financial Records?
Here are the different methods of organising financial paperwork:
- Organising Hard Copy Financial Documents:
You can follow these steps to organise your hard copy financial documents:
Step 1: Finding all the financial paperwork, from bills that are previously due on your business licence, is the first step on the path to financial organisation. You must take the document if it is significant. You are going to start by piling things up.
Step 2: You need to organise your paper financial documents after gathering them all. Sort the records that need to be filed, trashed and filed. Use trays or boxes for this purpose.
Step 3: After sorting them, take care of the records individually and make sure to keep them waterproof.
Step 4: Put fresh financial records into the appropriate boxes as they arrive and manage them accordingly. Choosing a day to handle your financial documents can be helpful.
Step 5: While keeping a track of the new bills and paperwork as they arrive is vital, it's also crucial to frequently clean out your records. Go over your files to determine if anything has to be corrected.
- Organising Electronic Financial Records: Paper records can occupy a lot of room. As a result, many people are switching to digital. Additionally, banks and credit cards are switching from printed statements to digital ones. Here are the steps that you can follow to keep these financial records in one place:
Step 1: Create a folder on your drive or computer and label them with relevant titles.
Step 2: Scan the hard copies of all financial records and put them in relevant folders.
Step 3: Now that everything is digital, you can usually shred any documents or monthly bills. You should not store hard copies of loan documents, tax returns, government documents, etc. You should file these in a designated folder in a secure location, just like you would with paper documents.
Step 4: You should keep these financial records backed up in a safe place, such as on an external hard disk, flash drive or OneDrive or iCloud. This will ensure that your documents remain safe even if your computer crashes.
3. Using an App to Organise the Financial Records: You can download personal finance apps to keep your data organised if creating folders and organising your electronic financial information yourself seems a little overwhelming. They are straightforward and simple to utilise. For improved budgeting, they also keep track of your weekly, monthly, and annual costs. The only disadvantage of these apps is that you have to spend money from your pocket to avail of the benefits and services of the tool.
You have to invest a considerable amount of time when you decide to organise your financial records. It does not happen overnight. However, once you get hold of the ways, organising the financial documents become a habit.
FAQs about Organising Financial Records
What are examples of financial records?
How can I store financial records?
What do financial records mean?
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Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.