Hazards not maintaining your Accounting & Bookkeeping
Maintaining a track of your financial transactions is critical for every business, be it a Startup or a growing one. You may be a smart and alert minded, but to hit the road to success, being able to manage your money will be a prerequisite. Maintaining your books of accounts regularly, particularly being able to have a sum of your affairs every month, will play a big role in allowing you to make informed decisions about the business. Having a diligent accountant updating your books and reporting every month is the key. This will reap benefits far more than your imagination.
Many new generation entrepreneurs believe in the DIY rule, specially when they are a start-up, to save on costs, they give lesser significance to bookkeeping from the word go. The belief that such housekeeping tasks can be taken care off at a later point once your business increases is a completely false. It should be taken care from the word go since you want to track everything that you are doing or spending and earning, be it meeting client meetings, marketing costs to promote your brand, product and services, what’s selling well, what you owe to creditors and what your customers owe you. This is best reported by a professional accounting firm and you shouldn’t hesitate outsourcing your accounts to one. Regularly updated business accounts and monthly reports from an accountant will enable you to decide on the areas needing focus as well as support you on keeping at what you do best i.e. creatting better customer experience by improving the products or services. Ignoring this huge advantage and leaving things to your mind can put everything in a disarray.
Now let’s highlight the hazards specifically that can result by not maintaining your books:
- Uninformed financial issues
Books reflect your company’s stability as well as potential. Non maintenance of books can catch you unaware of possible financial issues that could destabilize your future and affect your cashflows. Without an accounting system in place identifying core issues is impossible and catastrophic.
- Recurring mistakes with strategies
Generally, business owners relying on their private diaries or excels can easily miscalculate their profit or losses. That could influence what strategy works or doesn’t for your business.
- Tax blunders
Filing your taxes accurately without properly maintained accounts is undoable. Your accountant can identify your incomes accurately for the year as well as diffentiate between your capital and revenue expenses for the year. You don’t want to end up over paying or under paying your taxes which could be fatal resulting into unnecessary interests or penalties. Also, when you file for your taxes you want every expense recorded and taken into account to assure you don’t elude taking eligible tax deductions.
- Risk losing Collections
Without accounts, a business cannot generate accurate list of its debtors and collections receivable. It could result into delay in follow up with your debtors for any overdue invoices remaining unpaid. You could even possibly miss receiving a payment altogether. Regular accounts can speed up dues of your recoveries and assure timely collection.
- Limits your financing options
You could jeopardize getting loans when you need them the most, either during crunch or for expansion. Financial institutions do not entertain or consider for lending, any business that doesn’t have up to date or no accounts and borrowing from private uninstitutional lenders is risky and costly.
So if you a new business or are falling behind in bookkeeping, avoid such chaotic situations. Its better to bring a professional accounting firm such as CharterCPA on board asap to help and safeguard your business and facilitate better decision making.
Need help with your accounting? Schedule a call with us today.
Thanks & Regards,
Knowledge Process Outsourcing Team
3 Grace Ave, Great Neck NY 11021