Accurate and complete financial records are undoubtedly the foundation of any business’s success. However, given that the process of maintaining them, commonly known as bookkeeping, can be time-consuming, it is often tempting to neglect this task and put it off for later when tax season comes around.
While this might be a common practice for some companies, it is ill-advised for your business to do so. This is because proper bookkeeping is vital to a business’s growth and survival. From easier tax filing to an up-to-date status of the company’s financial health, the information provided by accurate and timely bookkeeping leads to plenty of benefits that give you the data you need to succeed. Let us share what can happen to your company if you do not perform proper bookkeeping.
1. Financial records become inaccurate and unreliable
If your books are not updated regularly or are missing vital financial information, the company’s records can quickly transition from being useful to inaccurate and unreliable. On top of that, you will lose sight of when and where your cash is coming from and to whom you owe money.
This situation also makes it more challenging for you to sort out your fixed and variable costs, which can obscure the business’s breakeven point. Essentially, without a solid bookkeeping system in place, your company’s financial records become spotty, making it near impossible to track down any discrepancies that may arise down the line.
2. Invites a host of avoidable problems
Without an updated record of your business transactions and expenditures, the company’s finances and its viability can easily become obscured, making key processes like tracking your cash flow projections and statements nearly impossible to accomplish.
When you cannot keep track of your cash flow, it could obscure other avoidable issues that can develop into bigger problems, like held inventory, overdue invoices, or recurring variable expenses, such as hourly wages or shipping fees.
3. Your financing options become limited
There are times when your company needs access to money to invest in a business opportunity. During these moments, you would approach a bank for a loan. However, it is unlikely that your loan application will be granted if you cannot provide detailed financial records.
From the bank’s perspective, a company that has not updated its cost of goods sold and is clueless about its inventory and profits earned represents a high risk. Moreover, you would not just face issues with securing a loan; you may also find it challenging to bring on new investors or sell your company.
4. Catching up on your bookkeeping backlog wastes time
Although it is possible to catch up on your bookkeeping backlog before tax season arrives, it is undoubtedly a time-consuming endeavour. The time and attention spent on the task can be better spent on expanding your business. However, if you cannot find the time to maintain your books regularly due to your overwhelming workload, you might want to consider outsourcing your bookkeeping needs to a specialised accounting firm.
At Ackenting Group, we provide a suite of reliable accounting services to meet your business’s needs. Our seasoned accountants possess years of experience handling the financial records of various prestigious clients. With our team overseeing your company’s books, you can rest easy knowing your financial records are in good hands when tax season arrives.
With proper bookkeeping, you will be better equipped to plan an effective strategy to ensure your business’s continued growth, as your decisions are now informed by accurate financial records. Moreover, your company can now better deal with its obligations and better navigate the twists and turns on the road to success.
If you require any assistance on accounting services, feel free to drop us an email at firstname.lastname@example.org or contact us at +65-66358767. At Ackenting Group, we offer a complimentary 30 minutes online consultation for us to better understand your business requirements.