Keeping Proper Books is a Must

Author: Keith Huggett

When you are just starting out with a new business or building up a new purchase it pays to have a good set of books.  The problem is not everyone is good at, or likes doing the bookkeeping.  This can be a problem in many ways.  Sometimes it's just a factor of being too busy doing other things to get to the books or sometimes it's dreading the task, but either way the bookkeeping gets sidelined until it become a huge undertaking that is often more problematic than doing it regularly would have been.  Here are some reasons why keeping your bookkeeping on track is a good idea.

1. Legal Issues. If you need or want to bring in investors having a good set of books is a must.  It is illegal to have a set of books that provides different information from what is actually your true financial situation. You should be aware that most operating agreements contain ironclad consequences for bad bookkeeping, including dissolving or liquidating the company or handing over majority shares to a business partner or shareholders.
2. Audit. Being able to prove your income and expenses is a must when it comes to surviving an audit intact.  Without this proof, you are easy prey for IRS auditors.  If you cannot prove your income, you may find that you will be paying out fees, penalties, and interest in the future.
3. Cash Flow. Without knowing how much money you have available to you at any given time, it is impossible to know how much you can use to promote or invest in your business.  You are unable to purchase items that may need repair or replacement.  You are unable to hire employees that you may need and you may be forced to layoff necessary employees due to overspending. With a concise picture you will be able to decide where to allocate your resources for the biggest ROI.
4. Relationships. By not keeping control of your books, it can be difficult to keep control of your office relationships.  When you do not know if you can make payroll this month, you put a strain on the relations with your staff. Hiring the right people can be difficult enough without causing unecessary stress and strain. It is key to make sure that your staff is being paid on time and that the proper payroll tax withholdings are being accounted for.
5. Recovery. When you have a bad set of books, recovering from them is a timely task.  Why is this? As you try and correct your bookkeeping errors, more and more transactions accumulate, compounding the problem.  You end up with a monster bookkeeping project.  The best solution at this point may be to outsource your bookkeeping to a qualified bookkeeper.

By accepting that you may not be the person best suited for the job of "bookkeeper" for your business is a valuable asset as an entrepreneur. If you are in need of someone to take a look, evaluate your books, just to see if you may have a problem, the professional bookkeepers at The Tax Office, Inc. would be happy to do so.  Contact us today for a no obligation, no cost consultation.  It may be time to look into outsourcing your bookkeeping to a full service tax preparation company designed to help your business grow.