Introduction 

Bookkeeping is an essential component of any business. Some small business owners choose to operate this department on their own, but it can become difficult when combined with other obligations.

Many times, small business owners focus on bookkeeping while neglecting other responsibilities. Or vice versa, they leave bookkeeping on the back burner, and when the time comes to enter all pending transactions and financial details, having to backlog this enormous amount of data can be inconvenient.

These are situations that you may experience if your financial books are poorly managed. 

Unaware of the Health of Your Business

Finances are the core of every company, and they’re what keep your business alive. Thoroughly understanding the financials is the only way that the company can grow and thrive. Without a well-established bookkeeping process, the current financial condition of your company will remain unknown. Understanding the financial status of your business allows you to make strategic business decisions for your company’s growth. If your books are consistently unkept and out of date, this can immobilize your company’s expansion strategies.

Accounts Payable and Receivable are Unorganized 

Poor bookkeeping habits can lead to unorganized accounts receivable and accounts payable. This indicates that the expenses each month are untamed and can result in an increasing, sometimes unnecessary, overhead. This could also result in being unaware of the services, invoices, or products that are unpaid by clients and ultimately losing revenue.

Cash Flow Issues

Cash flow issues are a common result of unkept financial books. Many small business owners that don’t maintain their finances properly experience delayed payments, bank overdraft fees, no left-over cash, and more due to unmanaged bookkeeping.

Strategizing and Planning Ahead Become Difficult

There are milestones and goals that every small business owner wants to achieve, but without the fundamentals of your business—finances, organization, and being current—they can be unattainable. Clean and current financial books enable business owners to make strategic decisions and plans for the growth of the company.

Tax Deadlines are Missed

If the business’s bookkeeping is not current and unorganized, then when it comes time to file taxes, it can be a nightmare. You will have to backlog months’ worth of financial activity, reports, and more. There are many risks that unkept books invite, such as rushing through your taxes to meet the deadline, increasing the chances of tax errors. Or even missing the tax filing deadline completely and receiving hefty fines. If properly kept, clean and current books can make tax season a breeze.

Possible Fraudulent Activity Audits

Small businesses are more susceptible to getting audited by the IRS or the Department of Labor. If the financial books are unorganized, it can raise significant suspicions of fraud by the IRS. Also, if payroll is delayed or late consistently due to unmanaged bookkeeping, this could be reasonable grounds for a Department of Labor audit. This can result in the permanent closure of operations. This can be easily avoided by having your financial books properly and consistently handled.

Managing all of this and more can become very overwhelming for a business owner. Therefore, business owners hire a bookkeeper to handle these tasks.

Having a bookkeeper who is committed to handling your financial accounts can enable you to make informed financial decisions in addition to freeing up your time. 

Depending on your accounting needs, bookkeepers record your daily transactions, keep track of your spending, sales, and purchases, appropriately file mandatory government payments, and more.

 A bookkeeper can analyze your cash flow and make a projection for the future using this knowledge. The accuracy of this data is essential for business owners since it allows you to steer your company in the right path for growth once you have a clear understanding of its financial trends and present financial situation.