Hiring a great bookkeeping service can not only keep you from losing your sanity, but it can also help protect you from a potential lawsuit because your books are a mess. All businesses need a great bookkeeping service on their team.
What is bookkeeping?
The first thing you should know about bookkeeping is that it’s not just a tax savings tactic. Bookkeeping includes documenting, storing and retrieving financial transactions for businesses, individuals, and nonprofit organizations. Bookkeeping in the past involved copying numbers into a ledger book; today it involves downloading data from your bank into your accounting software system. Clearly, downloading is much faster and less vulnerable to input errors, but the initial setup of your bookkeeping system has become much more critical to your success.
Why is Proper Bookkeeping Important?
It’s common for small businesses to make bookkeeping mistakes during their early years. They usually lack knowledge when it comes to the appropriate bookkeeping practices. Those that don’t keep their books current make their situation even worse. Hiring an experienced bookkeeper will help you avoid devastating pitfalls that can have a negative impact on your business. Good bookkeepers notice developing trends, see important patterns and are highly skilled; abilities that not only protect the companies they work with but improve their bottom line.
Once you get to the point where your books suffer because your business is thriving, it’s time to hire a good bookkeeper. With a good bookkeeper on your team, potentially costly mistakes will be found faster, and your business will operate more efficiently. Let’s face it, as the owner of a small business, you need to spend your time doing the things you do best and not doing the bookkeeping.
Future Consequences of Having Poor Bookkeeping
Inadequate bookkeeping practices can lead to a long list of problems including:
- Late creditor payments and a poor commercial credit rating
- Banking records that are impossible to maintain efficiently, having a disastrous effect on your business
- Inventory overages or shortages due to financial mismanagement
- Under-reported or unreported items, like investment income, rental income, revenues, or other types of earnings
- Tax problems with the IRS or local and state government agencies
- Incurring late fees and various other penalties, causing devastating hits to your budget
- Late payments, overdraft fees, and even account closure status
- When it comes to payroll, employees can end up with erroneous year-to-date earnings on their end of year W2 form and pay stubs
If you have poor bookkeeping habits, it’s time to contact a professional service to discuss creating a system that’s right for your business.
Bookkeeping is critical for business success. Contact us today if you’re interested in our bookkeeping services!