7 Consequences of Poor Bookkeeping
Accurate bookkeeping is indispensable for business owners as it offers the foundation on which business owners make financial and organizational decisions such as taking loans, hiring new employees, investing in new assets, and paying taxes. Accurate Tax & Bookkeeping, a bookkeeping and tax filing service, lists down how poor bookkeeping can harm small businesses.
A poor categorization of expenses such as business and personal can land a business in a lot of trouble during tax filing. Moreover, when all the expenses are not recorded, business owners cannot determine and anticipate their year-round spending pattern. A shortage in supply and production can derail the business goals and lead to a loss of revenue and reputation.
Bookkeeping mistakes may include misinformation on revenues, investments, rental income, and other income sources. A wrong record of the income can land a business in the bad books of the IRS and the state as well as the federal government.
Businesses work with a lot of creditors and money lenders. Disorganized bookkeeping can make businesses lose track of their payments due to creditors, which can impact the credibility and reputation of the business. These late payments can further jeopardize the business’ ability to obtain credit, lead to higher interest rates, and reduce the credit score of the company.
When revenues, expenses, and debts are unclear, the business owners remain unclear about the company’s financial performance. This does not allow them to create adequate budgets or prevent financial crises. An effective accounting system on the other hand will include budget variance analyses to understand if business goals are being met or if the management needs to change the course of action.
Overdraft fees, late payments, and account closure are some of the byproducts of poor bookkeeping that businesses may face. When commercial banking records are mishandled, the business can run into trouble with banks as well.
6. Errors and fraud
When a business has a robust accounting system in place, the chances of errors and fraud reduce drastically. Moreover, internal audits and external audits help businesses maintain accurate records.
7. Tax filing issues
When the books are maintained accurately and across the year, tax filing becomes a breeze. If not, businesses tend to lose track of their tax obligations and end up paying huge penalties for late or inaccurate taxes. Depending upon the type of business, tax filing may be needed quarterly and monthly as well besides the annual income tax. Moreover, a clear bookkeeping practice also allows businesses to make effective tax strategies that save them a lot of money.
Investing in a reliable bookkeeping service or hiring an in-house bookkeeper is necessary for businesses to stay afloat, thrive, and stay away from tax troubles. Businesses can contact Accurate Tax & Bookkeeping to take care of their bookkeeping and maintain their peace of mind.
Specializing in handling the financial needs of businesses of all sizes, Accurate Tax & Bookkeeping Services is a tax preparation and bookkeeping service company founded in 2010 by Greg J. Menia. The team performs tax services for small businesses and large businesses alike, serving all areas around Tampa, FL.
Call (813) 655-9702 today for “accountants near me” in Brandon, Florida. Alternatively, contact Greg and the team at Accurate Tax & Bookkeeping Services by emailing [email protected] or visiting the offices at 710 Oakfield Dr. Suite 159, Brandon, FL 33511.