Running a small business is a challenge. You are always doing a variety of things to keep the company growing and on track. With so much to do, it’s easy to let the bookkeeping to get behind.
The problem is if you let your bookkeeping slip, you could be dealing with some serious issues. Those issues are serious enough that they could cause your business to close.
You didn’t open your business just do do business accounting. You likely have no desire to even do basic bookkeeping. The problem is it has to be done, even if you don’t want to do it.
What happens if the bookkeeping gets behind? Here are five things you may face if your books are out of date.
#1 Making Financial Decisions Based on Your Gut Not the Numbers
You make financial decisions every day when you own a business. It may be ordering more inventory or asking an employee to work extra hours this week.
If your accounting is not up to date and accurate, you will be making critical decisions based on your gut feelings, not your financial stability. That’s not a good way to keep your business running long-term.
When you make decisions you need to have reliable numbers that show you the possibilities and limitations for your business. A bookkeeping service can help.
#2 Making Expensive Payroll Mistakes
The IRS and state law take payroll very seriously. If you overpay or underpay your employees, you could face serious tax and legal problems.
Are you current on paying your employees and paying employee taxes? Are you putting together the appropriate documentation each payroll cycle? How are you tracking employee benefits, time off, etc.? All of this is critical for avoiding problems with the government and tax authorities.
#3 Paying Higher Than Normal Accounting Fees
Paying a bookkeeper or accountant to clean up your mess of papers is expensive. You will pay for every minute the accountant spends sifting through your records to try and get your books caught up.
The fact is, even with a major effort, the accountant may not be able to get everything 100% caught up and accurate. This opens your business up for a potential IRS audit. The better option is to hire an accounting service now and get your bookkeeping up to speed.
#4 Undergoing a Stressful Audit
The IRS loves to audit businesses that don’t accurately record and report their earnings. And an audit can catch things you never thought of, including incomplete 1099s, unreported earnings, and misclassified employees.
Plus, an audit takes time. A lot of time. You will also need to pay your accountant for any time he has to spend providing records for the audit. Your time is focused on the audit instead of your business. It’s just a mess.
#5 Throwing Money Away
When was the last time you sent out invoices? Do you have any accounts receivable that are behind on making a payment? Do you have a strategy for collecting overdue invoices?
If your bookkeeping is not up to date, you don’t know who owes you money, how much they owe, and how far behind they are. You are essentially throwing money away when you let customers slip out of paying you. Remember, cash flow problems are the #1 killer of small businesses.
Let’s Get You OnTrack
It’s time to get your books up to date and keep them that way. If you can’t do the job yourself, outsource it to OnTrack Financial today. Our San Diego accounting service will save you time, money, and headaches.