With seemingly everything on your plate as a small business owner, it is easy to let bookkeeping slip.
The causes for this vary. For some people, the bookkeeping bores them so it gets eternally put off. Others think it is “simple” and can thus be put off until later (queue the inevitable shock when they’re sitting among piles of papers/emails/invoices/receipts for hours on end trying to catch up).
For some business owners, they are simply pulled in far too many directions and then a week becomes two all of a sudden.
You’re busy! You care about other things! You didn’t start your business to be an accountant and have no interest in business accounting!
Trust us, we hear you. (It’s why we’re here!)
But, unfortunately, just because you don’t want to do the bookkeeping doesn’t mean it doesn’t have to be done!
We’ve put together a list of 5 problems that arise If you let your bookkeeping take the back seat of your business.
Poor Financial Decision Making
Like it or not, every day as a business owner is a day to make a business decision.
Whether you’re deciding how much inventory to purchase, if you need someone working a swing shift, if you can treat your employees to a company lunch, if you’re looking into cost management strategies, if it’s time to open a line of credit, or simply which bill to pay first – it seems like it is always decision time.
We always say that if you don’t have the numbers to back up your decisions, you’re “flying blind” and are forced to make decisions based on feelings, not facts.
This does not bode well for the long-term health of your business!
You need accurate and reliable numbers, accessible regularly, and presented in a way that clearly demonstrates what the correct avenues are for your business.
Are you up-to-date on the payroll? Are you auditing it and ensuring that you have the proper documentation? Are you correctly tracking time off, benefits, contributions, etc?
If you are over or underpaying your employees this can lead to serious tax (and potentially legal) implications.
You need to be sure that you are compliant and up to date and that you have the cash flow necessary to pay out your employees on time.
High CPA Fees
If you hand your CPA a mess of unorganized papers, they’re going to hand you a massive bill.
Disorganized books cause the CPA to have to spend far more time on your filing – and every minute they’re sifting, they’re charging! They might be able to catch your books up 100% but more likely than not, they’re going to do their best with what they have and it could leave you open to an IRS audit.
If you aren’t correctly reporting and recording what’s going on in your business, it’s like putting a bullseye on the business to the IRS.
They could catch a miss-classed employee, incorrect deductions taken, incomplete or not filed 1099s or unreported income.
Then, when they show up with fees and an audit, if you don’t have up to date books, the audit can take weeks of time away from your other important business duties.
You know all those people who owe you money? Are you on top of customer invoicing? How long has it been since you last invoiced them? Is it time to reach out again?
Falling behind on your Accounts Receivables is like giving away free money. And, in a world where cash flow is the #1 reason that small businesses fail, you’re giving away security in your business.
Managing AR is a key function of bookkeeping and it is important that it is managed closely and efficiently if you want your business around for the long run.
Get on top of your books sooner, rather than later, to save yourself money and headaches.
If you don’t want to take on the tasks yourself, it’s time to think about outsourcing! Schedule a meeting with us here and let us take the books off your plate.