The Significance of Bookkeeping and the Risk of Not Doing It
Updated: Jul 21, 2022
Bookkeeping is one of the easiest tasks to put off for many start-up businesses. As a result, many entrepreneurs elect to invest their time into growing their business and overlook the importance of tracking up-to-date financial records causing them to face hefty fines and a myriad of other problems. Here are a few examples:
Being Blindsided To Your Companies Financial Position
Bookkeeping is crucial for determining your companies break-even point and for adequately managing your cash flow. It is important to be able to access general ledger reports, balance sheets, cash flow statements, and profit and loss reports at any given time to pinpoint errors and spot opportunities that may arise.
Obtaining Business Financing Becomes Difficult
If you are in need of a loan, you will be required to provide proper financial records to lenders, banks, and investors; therefore, having updated books is a must. Without those records, it's unlikely that your loan will be funded, as there would be little to no evidence to prove your business's ability to pay the loan back.
You Will Overlook Key Tax Deductions
For some, the thought of handling business expenses seems simple until they forget to put something on the company credit card or receipts go missing. Those types of errors lead to transactions being improperly categorized or not recorded at all, which can result in a loss of thousands of dollars. When your books are in order, it simplifies tax season and helps your accountant identify necessary tax write-offs. By having your books up to date and bank accounts reconciled, the chances of missing write-offs are massively reduced.
You'll Be On The IRS's Radar
By not properly tracking business profits and expenses, there is a great chance your taxes will go unpaid or incorrectly reported, which could lead to large fines and possible IRS audits. In addition, unpaid taxes could lead to leans being placed on your business and collection agencies contacting you.
All in all, it is not good business practice to push your bookkeeping aside. In the end, it just causes more headaches and will cost you more money in the long run. Are you behind on your bookkeeping? If so, it is never too late to get caught up and take control of your finances. Are you looking for someone to manage your books? If so, contact me today, I would be happy to assist you! I am an Advanced Certified QuickBooks ProAdvisor and specialize in working with clients who have QuickBooks Online, QuickBooks Desktop (PC & Mac), QuickBooks Enterprise, and QuickBooks Premier. Located in Murrieta, CA, and servicing clients nationwide!
Accounting & Bookkeeping Services by Superior Virtual Bookkeeping LLC