If you own a business, you’ll already be aware of the importance of managing your finances carefully. However, you may not be as clued up on the best procedures for auditing. Many people think they should only have their company audited when it’s legally required of them, but this is not the case.
While auditing is legally required for certain businesses, there are a number of other reasons to conduct an audit regularly. An audit will give you an insight into your business’ finances, making it easier to secure investments and loans, as well as help you identify weaknesses that could lead to losses.
Here, we investigate why a regular audit is important for your business.
It will ensure taxes are correct
As a business owner, you must take responsibility for ensuring any taxes you owe are paid correctly by the date they are due. While your finance team or accountant should be competent in handling this, conducting a regular audit of your taxes will confirm whether your business is paying the right amount of tax to HMRC.
Choosing an external auditor to conduct the audit will not only increase your company’s financial credibility but will also ensure your stakeholders are provided with complete transparency in regard to the business’ accounts.
It will reassure stakeholders
Auditing will give you an idea of how well the business is doing financially, which will be useful information to have on hand when discussing the business with its stakeholders and investors. Anyone who has put their money into your business will want to be kept up to date with all the crucial aspects of the company, especially its finances.
You’ll gain credibility for lending
If you want to obtain a loan for your business, it’s essential to have up to date information on the company’s finances. Conducting a regular audit by an external auditing specialist will help you achieve this, which will help build your lenders’ confidence in regard to the company.
It’s likely your finances will have a significant impact on whether a lender agrees to offer you a loan, so providing audited accounts will go a long way to helping you borrow the money you need.
You’ll improve your business
An audit isn’t only helpful to lenders and investors, but it will also benefit you and your business. An audit will give you insight into losses or growth and conducting audits regularly will allow you to identify patterns and trends.
Being knowledgeable about the business’ performance and being aware of reoccurring issues will help you iron out any kinks in your processes that could be contributing to losses. This also applies to areas of growth, as you may be able to track what the business did to achieve success in those areas.
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