Just like a messy home takes infinitely longer to clean than one that’s been regularly maintained, so it goes for tidying up your business’s accounting records – the more you stay on top of them, the easier they will be to “clean up” come tax season. Not only that, but the cleaner and more accurate your records are, the less likely it is that you will be faced with a surprise bill at the end of the year.
But that’s not the only reason it’s important to keep clean internal accounting records – especially if your business is growing. Make sure your records are in tip-top shape so tiny problems don’t snowball as you grow.
Accurate accounting records, well-organized accounts payables and receivables and timely bank reconciliations will help ensure the future health of your business and allow you to:
- Manage and pay down debt effectively
- Correctly forecast your business’s growth trajectory
- Pay owners, stakeholders and employees in a timely fashion
- Project tax liability
- Plan and save for the future
Mismanaging records, on the other hand, could have detrimental effects on your business. In addition to setting yourself up for messy tax filing, you also run the risk of misallocating your cash – which means you might not have enough cash on hand when you need it most.
There’s never a dull moment for small business owners. And sometimes accounting activities get bumped to the end of the list when unexpected demands inevitably pop up.
Step away from the books
Many business owners take on the responsibility of serving as their business’s primary accountant, regardless of whether they are actually trained to take on the role – and they often underestimate the amount of time needed to manage their business’s books. The result? Your business is left with weak internal controls, which not only opens you up for fraudulent activity, it hurts your company’s potential for growth.
This isn’t to say that this kind of set-up never works; but it ultimately depends on the individual and their business. Most of the time, however, business owners are simply far too busy running their day-to-day operations that they can’t give their accounting activities the time and energy needed.
The bottom line is this: if you don’t have timely, accurate accounting information, if your records appear off in any way, or if you feel overwhelmed by the current state of your accounting activities, it’s time to make some changes.
An accountant can help set you on the path to success, and save you from headaches down the road. Depending on the size and budget of your business, it might make sense to hire someone internally. If that doesn’t seem like the right path for your business, you may want to outsource this function to a CPA firm … which not only takes a lot off your plate, but you could also see significant savings in outsourcing the work, compared to hiring a full-time employee. Begin by consulting with a CPA, or ask around within your professional network for a referral. Regardless of where the help comes from, your accounting is too important to go by the wayside.
Your Most Powerful Business Resource
Receivables, payables, payroll, permanent, temporary … when it comes to outsourcing your accounting work, no job is too big or too small – but your savings could be significant. Find out why some business owners choose to outsource their accounting responsibilities and the effects it has on their businesses. Listen to episode 16, “Outsourcing: Quite Possibly Your Most Powerful Resource,” to hear Heather McNichols address some frequently asked questions on unsuitable on Rea Radio.
By Mark McKinley, CPA (Dublin office)