By Stacey Gorowitz, CPA, MBA
Just as in personal life, most of us are eager to start our businesses off on the right foot in the New Year. One of the best places to focus attention on is bookkeeping and accounting. If you’re on top of this, you’ll have a good view of the health of your business and be able to make informed decisions as the year progresses. And yet, it’s very common, even for successful companies, to let accounting take a back seat to other operational areas.
Here are some questions you should ask yourself as 2014 begins. They may help you find out just how much work you need to do to get your books into shape. Do any of these scenarios sound familiar to you?
- If you have several businesses, is the accounting and record-keeping set up separately for each company and separate from your personal finances so that you have a clear picture of operations? This is step one to good financial management for your business and your personal finances.
- Can you look at your financial statements to determine with certainty where you stand in terms of cash, accounts receivable, accounts payable, net income and gross profit? If not, you need to bring these records current and put them into a clear, usable format that shows you what you need to know at all times.
- Do you have a controller and a booming business, but find that you’re so busy that you are somewhere between six months and two years behind with your accounting and tax filings? Falling behind in your accounting and taxes is dangerous to your financial health on many fronts. It can expose you to costly penalties, create a situation where it is impossible to make timely management decisions, not to mention the possibility that errors or theft that can go undetected Stop, breathe and get the help you need to catch up on these critical tasks. They’re every bit as important as dealing with the rush of day-to-day business.
- Were you surprised by a large tax bill in 2013? You should not be surprised when you file your taxes. If your books are a mess and you’re behind in your accounting, you may be throwing your hard earned money away as tax planning can’t be properly implemented. This doesn’t even include the potential penalties and interest you may have to pay unnecessarily.
- Do you have unreconciled accounts? This can include bank accounts, credit card accounts, loans, etc. If so, it is important to note that these can come back to cause unnecessary problems. Keep in mind that there are limits to the amount of time you can dispute charges and banking activity. Have your books been adjusted to agree with your income tax returns? Left undone, the discrepancy can create headaches down the line and cost both time and money to fix. Also, this can be an impediment to obtaining financing, not to mention embarrassing for you as a business owner. It may also result in a misstatement of your historical records when calculating gains and losses on future transactions.
Now is the time to embrace the 2014 technology and implement strategies that minimize the workload while keeping your books current and compliant. We are QuickBooks Pro Advisors that specialize in helping small and medium-sized companies automate their business processes so they can focus on managing profitability. Call us for a free initial consultation and we’ll help you handle the backlog.