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Published On: Wed, Aug 9th, 2017

5 reasons to avoid the pitfalls of poor bookkeeping

Do you happen to run a small business? Or perhaps you’re self-employed and are in charge of your own finances? Do you find accounting software to be a little bit intimidating? If you answered yes to one of these, there’s a good chance that you absolutely despise having to crunch the numbers and figure out your annual taxes. These activities are so excruciating that many people procrastinate them, until their facing a major deadline without enough time to properly prepare.

This can result in major problems and could potentially lead to late fees, penalties, or even bankruptcy. If you fail to work with a skilled bookkeeper, it’s only a matter of time before you’re going to face problems. Let’s go through some of the specific risks of not hiring a skilled bookkeeper.

photo/Steve Buissinne via pixabay

Don’t stop short of business’s true potential

The vast majority of modern businesses would like to expand and grow their bottom line. This can be difficult in the face of competitive pressures like globalization or tight local labor markets. In order to thrive, your business needs to generate revenue at an ever-growing rate.

If you don’t have someone at the helm who understands exactly how much money you are making, it will be a lot harder to measure and respond to the factors that drive revenue growth. Think about it: if you’re not keeping track of your finances, you’ll never know whether or not it is time to initiate an expansion. You may be losing money in all areas, but do not realize it.

If you’re not expanding, you’re not pushing your business to its full potential. There’s a possibility that you’ve already accumulated enough capital and/or credit to expand to a new location or start a new product line. This is where your bookkeeper will prove to be a great asset to your business. They’ll let you know whether or not you’re ready to move forward with your business expansion.

Stay on top of your business’s performance

It is very easy to get caught up in the day-to-day minutiae of your business. You could easily find yourself spending an abundance of time working with your clients or trying to manage your employees. If you don’t have a bookkeeping service in place, you could easily let important financial details about your company slip through the cracks.

Bookkeeping is absolutely pertinent for staying up-to-date with your company’s performance. Once you’ve gotten the numbers accurate and in line, you’ll know how well your business is really doing and what needs to be improved.

Poor bookkeeping can hurt employee morale

Another thing to remember is that your workers are not going to work for you, if they’re not getting paid on time. In fact, failing to pay your workers will lead to costly turnover rates or lawsuits. Your workers may go on strike or they may walk off of the job all together. Online bookkeeping solutions may be able to help keep a regular cadence if that isn’t your strong suit. By ensuring your employees are paid in time and in full, you’ll be able to prove that you’re competent and that the business has good prospects. In return, they’ll be much more willing to work a little harder for you and your company!

Work with a bookkeeper to ensure all payroll expenses are paid on time consistently each and every week.

Poor bookkeeping can disrupt your supply chain

Whether you run a restaurant or construction company, you’ll be required to buy supplies, and your vendors want to get paid. It would be impossible to run a business without having access to the appropriate supplies and they will dry up quick if you’re in arrears.

With this in mind, make sure that you pay your suppliers on time. If you happen to have a monthly contract with the supplier, there’s a possibility that you will end up forgetting to pay them in the future. A disruption in your supply chain could lead to serious issues for your business.

Without cups, you will not be able to serve your customers. Without wood, screw and nails, that house isn’t going to get built! Work with a bookkeeper to ensure that your suppliers are paid on time, so the work can continue uninterrupted.

Poor bookkeeping can lead to tax penalties and late fees

Finally, you should realize that all companies must pay taxes on the income they earn. If you run a business, you may be required to pay business and personal taxes. Unfortunately, figuring out how much you owe and submitting your payment can be far more difficult than you might imagine. This is further complicated by the fact that failing to pay your taxes on time can lead to penalties and late fees. Do not let this happen!

Work with a bookkeeper to ensure that your taxes are up to date and fully paid. This will help you avoid unnecessary expenses and potential legal complications in the future.

Author: Ben Mart

About the Author

- Outside contributors to the Dispatch are always welcome to offer their unique voices, contradictory opinions or presentation of information not included on the site.

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  1. […] From invoicing and managing payroll to tracking quarterly and annual reports. […]

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