Starting a new business venture can be overwhelming. One of the most important aspects of your business is bookkeeping. Think of it as the command center for all that you do. It will keep track of all of your expenses as well as earnings. A well-kept general ledger is how you will make plans for your business each year.
There is so much to learn regarding bookkeeping that you may decide to call on a professional financial service in order for their experts to help you get set up. Once you see all that is involved in doing the bookkeeping, you may decide to keep them on and outsource your bookkeeping.
Here are some of the ways bookkeeping issues can be costly for your new venture:
- Becoming Overwhelmed By Bookkeeping Tasks
Bookkeeping is an essential part of your business, but that doesn’t mean you have to do it all yourself. Without a background in business, accounting or tax law, most will find bookkeeping to be completely overwhelming, and this may lead to costly errors. Choosing to hire a financial service will give you experts to keep track of your bookkeeping, finding any errors, and in turn giving you time to work on growing your business. Also, using AP automated software to manage certain aspects of these transactions promotes a higher level of communication, allowing all of your bookkeeping tasks to be monitored accurately throughout the year.
- Trusting An Inexperienced Finance Professional
When starting a business, it may be tempting to allow a helpful friend to do your bookkeeping while you are trying to save money. Unfortunately this would be a mistake. You need to make sure that whoever does your bookkeeping is well acquainted with withholding tax, expense tracking, balanced accounts and efficient, prompt payroll. When you or your helper make mistakes, it will end up costing you money instead of saving it.
- Failing To Stay Up To Date On All Accounts
Getting behind on bookkeeping gives you the feeling of slowly being crushed under an avalanche of work to do. Once you get behind, the tasks just keep piling up. Hopefully your bookkeeping will be a busy task because your business is going well. Choosing to outsource bookkeeping early in the life of your business will prevent the avalanche and the possibility of costly errors made due to being behind.
- Tracking Business Costs Inaccurately
Your bookkeeping will not be helpful or effective when your records are not kept up to date and accurate. This leaves your business open to losing money, being late on bills, being ill-prepared for taxes and so much more. Bookkeeping that is inaccurate will cost your business money and will not give you the proper tools needed for planning and growing your business. It is absolutely essential that your bookkeeping, whether done by you, an employee, or a financial service, keeps track of all transactions in order to properly know the overall health of your enterprise.
- Managing issues with Billing
The reason for opening a business is making money. Money is important to keeping your business up and running. Invoicing and billing properly will make sure your revenue is brought in on a regular basis giving you what you need to conduct your business. Again, this falls under bookkeeping and when there are managing issues with billing, you are going to lose money. Your billing will get delayed and therefore your payments will be delayed. A majority of new businesses fail due to cash flow issues.
- Planning problems getting ready for tax season
Tax season will be different when owning a new business. It has even more moving parts than your usual personal tax return. It is tempting to do it yourself thinking you will save money. However, when using a financial professional or a financial service, you usually end up saving money due to their knowledge of tax laws, deductions, payroll, and many other requirements. When outsourcing, the professionals will keep your documents and receipts ready all through the year, and you will not be left struggling to get it all together by tax day.
If you are confident that you are ready to handle all the bookkeeping issues noted above then you are ready to take on the accounting for your new business. If not, you may want to consider hiring a bookkeeper or outsourcing your bookkeeping to a financial service. This should ultimately save your business money, giving you the time and resources to focus on growing your new venture.
