As a small business owner, the founder of a startup, or an entrepreneur you have a lot of balls in the air. Is one of those balls your bookkeeping system?
For many business owners, keeping the books up to date comes last on a very long to-do list. But pretty soon, all those little bookkeeping tasks like filing away receipts, categorizing expenses, checking up on invoices, and reconciling your books can pile up.
Today your bookkeeping may still feel like a “someday” problem — especially when compared to your more pressing day-to-day business. But there are major consequences to not doing your bookkeeping properly.
Letting money slip through the cracks
If your books are in disarray, you can lose money — meaning it can get misplaced like change in the couch cushions.
You may neglect to invoice a client, accidentally throw out a check, or even get hit with a hefty fee for forgetting to pay a bill. And that doesn’t even take into account the small amounts of cash that may leak out of your account over time in the form of unnecessary expenditures or missed opportunities for tax-write offs.
When your bookkeeping is solid, you’ll know all your money is right where it’s supposed to be.
Missing opportunities for growth
You can learn a lot about your business when your books are up-to-date. For example, you can easily see which areas of your business are the most profitable, and which are costing you more time and money than they are bringing in.
You may learn that a pet project you love may be dragging down your business. Or, you may discover that doubling down on one revenue stream may help your business grow exponentially.
When you’re not keeping up with your bookkeeping, you’re making important business decisions based on emotions and gut feelings rather than the facts.
Scrambling at tax time
Maybe you’ve been thinking of bookkeeping as something that only happens once a year: in the weeks before April 15. If so, you’ve probably found yourself scrambling to collect all the documents and reports you need each year — which is both stressful and a waste of time.
Keeping on top of your bookkeeping throughout the year means that you’ll already have things in order by the time taxes roll around. This lowers your stress levels, of course, but it can also mean the difference between making the most of your deductions or writing out a hefty tax check.
Losing time to audits
If you do get chosen for an audit, you’ll wish you’d kept your books in better order. During an audit, the IRS wants to see that you have a well-kept bookkeeping system to track expenses and income.
Without a proper system to track expenses and receipts, you may end up with big gaps in your paperwork. This can be costly both in time and money, and it can completely disrupt your flow of business as you drop everything and scramble to find the proof you need to provide the IRS.
It’s time to get your bookkeeping system in order
Fortunately, there are excellent bookkeeping options for small business owners, entrepreneurs, and startup founders who want the peace of mind — and business insight — that comes with having properly balanced books.
Online accounting software, expense management software, and billing software can help automate many tasks, making it easier for you to go in and simply check that things are on track. Solutions like QuickBooks Online, Sage, and Xero also make it easy to build regular bookkeeping into your daily or weekly workflow.
Another option is to hire out your bookkeeping to a dedicated accounting professional. Not only does hiring an accounting professional take these tasks off your plate, but you can also count on their expertise when it comes to things like tax deductions and how much to pay yourself, or in finding business insight in your reports.