A critical part of running small businesses is bookkeeping. While it may seem like a tedious task you could put off for a rainy day, there can be many hefty consequences of avoiding your accounting. Here are several issues you may encounter if you don’t keep up-to-date financial records for your small business.
You Might Be Losing Money
Without a solid record of your books, you may not realize just how much money is coming in or how much needs to go out. This could be a massive problem for small business accounting, particularly where you need to maximize every dollar. Bookkeeping isn’t just having a written ledger of your account balance. It helps you track your expenses, including payroll and invoices. If you do not mind your accounting, you may not be sure which clients have paid their invoices and which are outstanding. Bookkeeping can also keep track of your employee benefits, like time off, healthcare, or investment benefits. Failure to keep track of those could mean that employee checks don’t go out on time, which can impact employee morale, or you may be overpaying your team without knowing, which can cause tax problems for both of you.
Fail to Qualify for Financing
If you’re looking for a loan or other financial help for your small business, you may need to present your bookkeeping to your financial institution to qualify. Not submitting up-to-date accounting for your business could mean that the bank will just say no. After all, without a record of your inventory or profit, they would have no idea if you’d be able to pay them back. Keeping up with your accounting can also help get investors and partners to join you or even sell your business in time.
The IRS Might Catch On to Your Bookkeeping
While you may not go to prison for not keeping up with your accounting, the IRS could issue late fees or other expensive penalties. If your books are truly out of order and you fail to report income that has already been reported via W2s or 1099s, take large, suspicious deductions, or classify your employees incorrectly could also warrant an audit.
Contact Bowman & Company for Your Small Business Accounting Today
Bowman & Company CPA, PC provides all of our individual and small business customers with experienced, accurate, and affordable financial services. Our financial services aim at decreasing your taxes and increasing your net worth through responsible, timely, and accurate recordkeeping. We offer our services to clients throughout the Washington, D.C. metropolitan area including Maryland and Baltimore County, Columbia, and Howard County. For more information on our offerings, contact us online or call us at (410) 381-8121. You can also find us on Twitter, Linkedin, Facebook, and Youtube.