Why do you need to set up a financial administration and what is it used for?
Setting up financial administration is necessary for your business with the right financial tools. Without a financial administration, you won't have an overview of your company's financial situation. Setting up a financial administration is not only useful to you as a business owner, it also allows you to submit your financial data to the Tax Authorities. There are mainly two reasons why you need to set up financial administration.
We have written various articles about financial tools. Have a look at the full overview.
A Financial Administration is Mandatory from the Dutch Tax Authority
It is mandatory from the Dutch Tax Authority to set up and maintain a financial administration. Every quarter you have to submit your data for the tax return (read VAT return). In addition, you have to submit your financial data every year for the income tax returns and, if required, for the corporate income tax returns.
The Dutch Tax Authority can also audit your company's finances. But what are you required to keep a record of for your financial administration and for how long do you have to keep your data? Read in the wiki of Gekko what the financial administration requirements are.
A Financial Administration Gives You a Better Insight
Setting up financial administration gives you a better overview of your company's financial situation. Keeping up a financial administration will help you answer questions such as: How much money is in the bank? Which invoices are still due? Have costs risen over the last period? Based on the information of your financial administration, you can manage your business and set goals for the future. It is good to know what needs to be included in a financial administration. In the end, setting up a financial administration is useful for your own understanding of your business, plus it makes your business easier to manage.