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Ask any entrepreneur with more than two years experience and they will tell you – in no uncertain terms – that being a business leader is plagued with hurdles, obstacles and snare traps. It is an uphill battle like no other. But for all the threats your business faces, none is more potentially damaging than bad bookkeeping.
It is one of the most crucial tasks in any business. It is what allows you to plan for the future, save for the tougher times, know what you are earning, see where you are failing and ensuring the money flowing into your business far outweighs the amount pouring out.
To help you understand just how important this area of business is, and hopefully prevent you ever having to call Alexander Law Firm LLC because the IRS is on your case, we have pulled together a list of common bookkeeping habits that have the potential to bring your business crashing down.
Choosing The Cheapest Bookkeeper
People who sell their services as cheap usually do so a) because they lack the experience or b) they are going to make this back by doing a poor job. So, instead of going down the cheap route, start focussing on how you can choose the best value bookkeeper, which means someone equipped and experienced in handling all aspects of managing your books.
To help you avoid any trouble, we recommend you outsource your bookkeeping to someone that comes recommended by a business or entrepreneur you trust implicitly. Paying more now is well worth it to avoid major financial implications down the line.
Nothing is more damaging to your business than having mistakes riddled throughout your books. It is one of those things that can be almost impossible – and certainly very expensive – to resurrect.
This isn’t just because you may think you have more in your budget than you actually do or because you are filing for less tax returns than you actually owed, but because you could lose track of your business profits in turnover and that could see you slip onto the wrong side of the law.
Trouble With Your Taxes
One of the worst things anyone can ever experience is the stern knock on the door that only the IRS can create. It is that moment you find out you are being audited by a federal branch of the government.
Yet that is what can – and will – happen if your bookkeeping is not in order. It could be that you missed your deadlines, didn’t pay the right amount of tax, defaulted on your payments or any number of things. Getting a visit from the IRS can have huge implications on your business, not just directly but on your reputation too.
As you can see, bad bookkeeping can lead to potentially disastrous outcomes, which is why you need to make sure all your expenses are categorized properly, your petty cash is perfectly managed, your taxes aren’t neglected and bank accounts are in flawless shape. It is not worth taking any risks on this front.