Don’t let bad financial accounting for a small business get the best of you.
Financial accounting for a small business is not for the meek, and it is not for the untrained. Many small business owners try to take on all the roles, wear all the hats and do all the jobs. And it’s understandable, especially if you’re just getting started. The downside of trying to be in charge of accounting and bookkeeping in addition to everything else is that you could be the victim of amateur financial accounting, and that can be bad for business. Let’s take a look at the real impact of not hiring a professional to manage the finances.
Bad Bookkeeping is Bad Business
Bookkeeping is the financial backbone of your business. If you aren’t doing it regularly, diligently, and correctly, you could end up in a world of hurt, not just come tax time, but anytime you need to pay a bill, invoice a customer, or manage payroll. If you aren’t keeping books accurately, it means you don’t have a solid picture of where you stand with your accounts, both payable and receivable.
Recording everything is critical, but doing it yourself can be daunting. That’s part of the value of hiring a professional. Instead of taking you away from running your business, a pro can manage all the record keeping on behalf of your business. You don’t need to need a full-time accountant to hire one; in fact, hiring a part-time professional can lift the burden of financial accounting from your shoulders. You can rest easy knowing it’s getting done right while you focus on what you do best.
Lack of Balance and Reconciliation Can Spell Disaster
How many promising businesses quickly failed because they didn’t keep track of their accounts and their balances? It’s critical that you know what money is going out and what money is coming in, and it all needs proper reconciliation. It’s fine if you want to wing it with your personal checking account and hope for the best, but a fly-by-the-seat-of-your-pants operation is not going to work for your business.
When it comes to matching what you think you have in your bank account to what you actually have in the account, even the small expenses matter. This is especially true for cash-based businesses, such as retail. No payment is insignificant. Every transaction needs proper recording, accounting and tracking. This doesn’t just matter when you need to prepare for and file your taxes; it matters every day to ensure effective and efficient growth, without financial issues or mistakes.
Failing to Effectively Manage Employees, Contractors, and Payroll Can Cost You
Payroll is easy for some, and a nightmare for others. You have to figure in benefits, taxes, vacation, sick time, and everything else that goes with having a staff, and that can be a complex and confusing equation. But it has to be correct to satisfy your employees, as well as the IRS.
To effectively manage payroll and staffing, you must also understand the difference between an employee and a contractor, and record their payments as such. This is vital to getting them compensated properly, and it can have tax consequences for you in the long term.
DIY Accounting Can Create Confusion and Chaos
Are you an accountant by trade? Probably not. Most small business owners aren’t. And that’s ok. You need to channel your expertise into the business you’ve created. Trying to manage and grow your business at the same time you’re trying to learn how to be an accountant can create a situation you will desperately try to climb out of at some point. Instead of trying to DIY your accounting, start by hiring an expert to get you going in the right direction, right out of the gate.
Don’t settle for amateur financial accounting for a small business. Give your business the support it deserves by bringing in the pros to do your bookkeeping and accounting. Call 678-990-0924 for a free consultation to learn how a pro can help your business.