Why You Can’t Ignore Bookkeeping
If you are tempted to neglect the bookkeeping for your business, I urge you to reconsider. Listed below are the negative effects of poor/no bookkeeping.
1. No Idea of Financial Condition
Failing to regularly update the books leaves you without current numbers. When faced with an important business decision that involves a monetary transaction, you won’t know if you have sufficient funds to go through with the decision.
When not in the habit of regularly recording transactions, there is a good chance some transactions will be missed, leading to inaccurate numbers. This distorted view makes your business appear either better or worse off than it really is.
You could miss out on some great opportunities to grow your business because you might mistakenly believe you don’t have the resources. Or you might take on projects that you can’t actually afford.
2. Cash Flow Issues
Tracking expenses reveals how much the business typically spends within a certain time frame. Without this knowledge, you won’t know how much cash will be required to cover those expenses.
It gets worse when you aren’t keeping detailed records of the clients who owe you. This makes it easy for you to forget, which some clients take advantage of by delaying their payments to you.
The ability to predict your expenses and payments, as well as making sure you are receiving payments, ensures that you will have the cash you need to stay afloat.
3. Tax Season Mess
Without proper records, you risk missing some tax deductions or overstating expenses. The latter case would become a problem if your business was to ever get audited.
If your records aren’t ready for tax time you will have gather a full year’s worth of records in a short amount of time. Not only is this stressful, it also takes you away from the other operations of your business.
Without an organized storage system, expense receipts might get lost. If that happens, you won’t be able to claim those expenses.
4. Awful Audit
When audited, all business records must be presented. Not having a bookkeeping system delays and complicates this process. It also increases the risk of losing the audit, resulting in big fines.
5. Insufficient records for business activities
When seeking a loan, adding a business partner, bringing on investors or selling the business, detailed, current and accurate records are necessary. Those involved in these activities need assurance that they are making a worthwhile investment. The objective numbers of the business provide this affirmation.
There is no shortcut. You must keep up with your books. If you’re not convinced, take a look at “7 Reasons Why Bookkeeping is Important”.
If you still struggle with bookkeeping, there is a solution. Outsourcing that dreaded task eliminates it from your to do list and puts it in the hands of a professional.
If you want to avoid the issues listed above, please contact me. I can take over the books for you and make sure they remain up to date and accurate.