If you decide to end your life, God forbid, there are several ways to do it. You could pull a noose around your neck. You could swallow a pill or jump off a hill. (You could take your girlfriend shopping ;)).
Or you can be careless about your small business bookkeeping.
Because NOT maintaining accurate books of accounts is like committing suicide. An error that is fatal!
Whether you are a contractor, freelancer or a small or large business owner, it is mandatory for you to keep accurate records of financial transactions. Inaccurate bookkeeping creates several problems that could threaten the very survival of your business.
Below are some of these problems:
1) Inability to know the status of your business: You need to know if your business is in good shape. You have to keep track of profits and losses your business makes so that you can plan for further growth. Without accurate records, it would be difficult to determine your current position and hence even more difficult to make future financial plans.
2) Lost tax deductions: If you don’t maintain your receipts on a monthly basis or at other regular intervals, you are likely to lose track of the expenses. If you wait until the tax season to calculate these expenses, you would tend to miss out on some of them. And that is nothing but shoving money down the drain.
3) Revenue service audits: In case you receive an audit from the revenue service you would be required to show them appropriate receipts that serve as a proof of your income. The burden of providing this information falls on you. So keep them organized so that you can avoid a lot of headaches at a later time.
4) Bank loans: Banks require proper accounting records to analyze and approve the appropriate amount of loan for your business. The better your records, the faster it is for the banks to do their jobs and the faster you get the loan.
5) Huge accountants’ fees: Accountants are busy preparing for taxes during the tax season. If your information is not organized the accountant will have to do bookkeeping of your unorganized records. This consumes time and you would end up paying a lot more than originally required to your accountant. Inaccurate records thus cost you a fortune which could otherwise have been spent well.
So ensure that your bookkeeping records are accurate and up to date. Doing so would help you so much -you can concentrate on your business, make future plans, save time and money and run a business free of financial headaches.
Your business will survive – and so will you!
If you have specific problems associated with bookkeeping and are looking for feasible solutions, post them as comments below!
