When correctly completed, your bookkeeping acts as a guidance system. It accurately reflects your financial health, so you are informed when making difficult decisions.
There is no upside to avoiding your bookkeeping. The consequences range from incurring fees from penalties or non-compliance to not being able to price your service or product accurately due to having a lack of information on your cash flow.
Join us for a quick read to understand how important bookkeeping is to your business's financial health and why failing to maintain the best accounting practices possible remains detrimental to keeping profitable!
Missing Tax Deadlines
Bookkeepers help prepare you for tax returns and meet all tax deadlines. If you don’t have a bookkeeper, you may not have current financial records, and submitting your tax return can become difficult. Moreover, without a bookkeeper, you are at risk of failing to meet tax requirements and deadlines, and as a result, you may incur hefty fees due to errors or discrepancies. Not only can you be at risk of nasty fees, but also consequences like extensive tax audits or, in worse cases, imprisonment.
Taxes are not something to be taken lightly. Bookkeepers can save you from late fines, overdraft fees, incorrect information return penalties, and much more. Taxes are an essential part of your business that you must complete accurately and in a timely manner, or you may face serious repercussions.
Inaccurate Financial Health
Your business's lifeblood is in its cash flow. Therefore, you need to know the ebbs and flows of your profits and expenses, shown through current and historical financial records. If you can produce these results, you will see a more precise picture of your financial health.
Avoiding your bookkeeping can cause problems and inaccuracies in your cash flow which can result in expensive consequences. If you are ill-informed, you could make adverse decisions with your finances that cause deeper financial issues. Not only will it create more significant problems in the future, but you will experience increased everyday issues such as missed payments or incurring missed deadline penalties. When left unattended, these can snowball into huge losses.
Not having up-to-date financial figures can do nothing but harm your business. It can hinder business growth, dampen supplier relationships and unnecessarily lose potential revenue. You need accurate numbers to know your financial health, which means you need a bookkeeper who will produce these promptly and consistently with depth and detail.
If you avoid bookkeeping by using your current employees as temporary or improvised bookkeepers, you must ensure you keep an eye on the activities in your accounting. Unfortunately, internal fraud happens. To ensure no malicious copy, you must keep tabs on your accounts and oversee your employees' actions from a distance. This includes having policies and principles in place for your employees to stand by.
If you take the right actions to oversee your accounts, your funds should stay safe and well-managed, but a substitute for a bookkeeper is not a bookkeeper. Instead, hire a trusted bookkeeper to lower any chances of internal fraud that can cause immense damage to your business and employee morale. Internal fraud is easily avoidable, but stay aware that it does happen, and it could happen to you.
Lacking Financial Strategy
Avoiding your bookkeeping means you have little to no accurate information about your cash flow and financial health. As a result, you cannot create a short or long-term financial strategy. Without having a goal to meet, how will you measure your success?
With up-to-date financial records, both current and historical, you can view the best and the worst of your finances and take informed actions to improve the bad and boost the good. For example, if your ultimate goal is overall growth, you can climb towards it with solid financial strategies created through accurate records and projections of your business finances. Gaining the essential details comes with employing and utilising a good bookkeeper.
Poor pricing is fixable, but you must have real income and expense details to create pricing that matches your current supply and demand. Avoiding your bookkeeping means sacrificing possible income, clients, or growth due to poor pricing, which can lead to cashflow complications and poor financial health. You can’t expect to come up with a fitting price sheet for your services or products with no data. With a bookkeeper supplying details of your cost and profit margins, you can work together to create a custom pricing list fit for your business and its current state.
Unhappy Client and Employee Relations
Your bookkeeping doesn’t finish taking care of accounts. It includes taking care of your clients, suppliers, employees, and more. Each of these needs precise attention, just as any other area of accounting. Discrepancies in invoicing, filing, payments, etc., can cause clients and suppliers to lose trust and make them uneasy in dealing with your business. Likewise, employees can become restless with your lack of attention in payroll and issues with wages, which can increase employee turnover and possibly create a bad name for your business. Without investing in a trusted bookkeeper, you are risking these negative impacts produced by bad bookkeeping.
So is it worth investing in a good bookkeeper and not avoiding it altogether? Absolutely. We know that avoiding your bookkeeping only ends badly. Invest in a good bookkeeper, and make them your financial teammate.
Your bookkeeper is on-board to support your financial journey and to help you soar above and beyond your business potential.
Don’t avoid bookkeeping. Instead, prevent the impending consequences, and gain a good bookkeeper to keep you up-to-date, compliant, and on the straight and narrow towards profitability.
Contact Ironbark Industries Bookkeeping today to discuss bookkeeping services, your specific requirements or any other financial management enquiries.