The Importance of Accurate and Timely Small Business Bookkeeping
If you’re a business owner, you know how complicated the finances can be! You work hard to keep track of daily expenses, pay your invoices promptly, and pay your employees. You try to make wise purchases and invest in your business without taking on too much debt. On top of that, many business owners also operate as their own bookkeepers. We want to take some time to delve into the importance of meticulous small business bookkeeping and why hiring a bookkeeper is one of the best business decisions you’ll ever make.
When it comes to small business bookkeeping, accuracy isn’t optional.
Over the years, I’ve heard these statements MANY times:
I do my own bookkeeping because I want to save money.
Bookkeeping isn’t that big of a deal. I can handle it on my own.
QuickBooks makes it easy for me to keep track of my business financials.
While it’s commendable that some already-maxed business owners try to tackle the bookkeeping beast, I want to make a profound statement. In my 20 years in the industry, I’ve never once seen accurate financials prepared by a business owner. And that’s concerning because accurate bookkeeping is critical for many reasons.
- Accurate bookkeeping helps you stay compliant. The IRS can audit your business at any point in time to make sure you’re reporting financial information correctly.
- Accurate bookkeeping is essential and helps you avoid a large tax liability.
- Accurate bookkeeping allows you to make informed business decisions that help your business succeed. For example, is it a good idea to hire another employee or invest in more inventory or equipment?
- Accurate bookkeeping helps you budget for the coming year and facilitates long-term planning.
- Accurate bookkeeping helps you track profit and growth.
You’re not saving when you tackle your own small business bookkeeping.
Ideally, we keep books for our clients. Then, when it’s time for tax prep, we know the books are tight, and the numbers are accurate, resulting in a more streamlined process. However, when business owners who’ve been keeping their own books come to us for tax services, we have a lot more work on our hands.
Because we haven’t been involved in their monthly financials leading up to tax season, we start by performing a high-level financial assessment and a Statements on Standards for Tax Services (SSTS), which includes “question[ing] anything that appears to be incorrect, incomplete, or inconsistent either on its face or on the basis of other facts known.”
We may also request additional information pertaining to gifts, auto expenses, meals and entertainment, owner distributions, payroll, bad debt, fixed assets, etc. This back-and-forth can be a headache for business owners who go into tax season expecting us to take their books and magically compute their taxes. On top of that, because of all the extra time and effort, we have to charge a premium for their tax prep.
In addition to the headache and extra cost, owners who keep their own books have the ongoing job of recording and categorizing all of their financials throughout the year, down to the cheeseburger and fries they had for lunch when they met with a client at a rural diner on a random January day.
When you do your own bookkeeping, even the tiniest transactions are always on your mind, and it’s hard to escape the nagging thought, Am I doing this right?
Your bookkeeper’s got you covered!
When you hire us for your small business bookkeeping, we handle all the details!
- We reconcile your financial records.
- We code your transactions.
- We record your bills.
- We can run your payments.
- We can invoice your customers.
- We record your deposits.
- We determine whether a cash or accrual accounting method is right for your business.
- We draw up your P&L and Balance Sheet at the end of the fiscal year.
- We help you determine which items should be deducted for book purposes and which items should be deducted for tax purposes.
- We foresee any tax liabilities and give you a heads-up if a year-end write-off is a smart decision for your business.
Also, because we keep tight, consistent books, you don’t have to scramble to complete your year-end bookkeeping for the 3/15 (S-corps and partnerships) or 4/15 tax deadline.
Believe it or not, you don’t have to dread tax season! When you choose Wood CPA as your trusted bookkeeping partner, you can focus your energy on running your business and leave the financials to us. If you’re interested in hiring Wood CPA for your small business bookkeeping, give us a call or schedule an appointment with us today!
