5 Important Reasons to Catch Up Your Bookkeeping

Letting it slide can cost you a lot of money

You’re crazy busy. Running a business, pursuing your passion, focused on growing your company… and at the same time taking care of your home and family.

You mean to deal with all the bookkeeping stuff, but it just keeps getting shoved to the bottom of your enormous to-do list. And while it might seem like that’s no big deal, ignoring your company’s books could end up costing you a lot of money.

Here are five critical reasons to get caught up on your business bookkeeping ASAP.

1. You’ll Miss Out on the Next Round of Funding

The pandemic has hit small businesses with a sledgehammer. Millions folded, millions more continue to struggle, and the rest face the possibility of bigger financial problems. Congress hasn’t passed another relief bill… yet… but they probably will. And that relief bill will almost certainly contain a lot of funding for small businesses.

To take advantage of that money, you’ll need to apply for it. And that means you’ll need up-to-date financial statements. If your company’s books aren’t caught up, you’ll end up toward the end of the funding line. So get your books in order ASAP to avoid missing out on free money for your business.

If you got funding in the first round…

And if you have already gotten a PPP loan or EIDL funding, you’ll need to be able to show where every single dollar went. If you haven’t specifically tracked your PPP or EIDL funds, you’ll need to do that ASAP. Otherwise you’ll have to scramble to figure out which money paid for which expenses when the bank or the SBA asks for that information.

2. You Want to Avoid Tax Season Panic

This year has dragged on for centuries… and flown by in minutes. Before you know it, 2021 will ring in, and that means tax season. If you’re due for a refund… if you didn’t get a stimulus check already… if you might need to get a business loan… you’ll want your 2020 tax return done ASAP.

The longer you wait to file, the longer it will take to get your refund. Having your bookkeeping all set and your financial statements ready to go will speed up your tax filing… especially if you work with a professional tax preparer (like me). That can be overwhelming if you haven’t kept up with your bookkeeping all year.

And with all the crazy tax law changes and huge question marks – especially surrounding PPP and EIDL money – you’ll want to work with a tax pro this year to sort out your business taxes, even if you normally DIY. But we can’t do your taxes without accurate, complete, and up-to-date bookkeeping.

In fact, that’s one of my most popular service offerings: year-end book cleanup, review, and reconciliation.  I have a few slots open for year-end 2020, but they fill up very fast.

If you want to make sure your books are ready for tax season 2021 – without feeling rushed, overwhelmed, and totally stressed – contact me by November 30 to secure your spot.

Don't forget: Your fourth quarter 2020 estimated tax payment is due on January 15, 2021. It’s your last chance to minimize IRS penalties on your 2020 income taxes.

3. You Need to Get Paid

When your bookkeeping falls behind, it can be tough to tell who owes you money or how much. And since you don’t get paid if your company doesn’t get paid, this can cause big problems for both your business and personal finances.

There are two parts to this issue:

  1. Making sure invoices get sent out right away
  2. Contacting clients who haven’t paid on time

I know the first one sounds crazy – that invoices wouldn’t get sent – but that happens a lot more than you’d expect. As a super busy entrepreneur, you have a lot of balls in the air. And once in a while you may be so busy that an invoice or two doesn't get sent. If you’re not up-to-date on your bookkeeping, you might not realize that for months – especially for one-time clients. And that means you’re going months without that cash.

And if you haven’t updated your books in a while, you can’t tell who’s paid you and who hasn’t. When you know a customer hasn’t paid up, you can send them reminders and take other steps to collect your money. But you can only follow up with those customers if you know they haven’t paid.

4. You Don’t Want to OverPay Taxes

Taxes chew up a big chunk of your profits. And if your profits are overstated – meaning higher on paper than they are in real life – you’ll be paying extra money in taxes. And you definitely don’t want to pay more than your fair share of taxes.

Accurate expense tracking is a huge piece of reducing your tax bill. And while it’s easy to track expenses paid by credit card or through your business bank account, you might overlook expenses paid by cash or with personal funds. (It’s best to NOT use personal funds to pay business expenses, but it happens.)

Trying to find and sort receipts months down the road makes it pretty certain that some expenses will get missed. And any legit expense that you don’t take means a higher tax bill… and less money for you.

5. You Want to Protect and Grow Your Business

You want your business to thrive. And to do that, you need to be able to evaluate its past performance and its future possibilities. That takes financial facts, the kind you’ll get from accurate reporting… and that means up-to-the-minute bookkeeping.

Complete, accurate, and current books tell you:

  • Whether you’re charging enough for your products and services
  • Where you could trim costs to maximize profits
  • Your company’s growth trajectory
  • How cash moves into and out of your business
  • Where trouble spots are before they become unfixable
  • The right amount to pay for estimated taxes
  • If there’s anything off –like fraudulent charges – in your bank or credit card accounts
  • Who your best customers are
  • Which are your best-selling products and services
  • Whether you need external financing – like a loan – to maintain or expand your business

All of the information can be found in your bookkeeping records… but only if they’re tended to regularly.

And that can be tough when you’re trying to get it all done on your own. That takes a lot of time that you just don’t have – but it’s my job.

With my help, your books will be clean, current, and complete. And you’ll have access to all of that valuable information that can help your business flourish.

If you’d like to stop feeling frustrated by bookkeeping chores

If you want to know where your business finances stand right now

If you want to minimize tax season stress and your tax bill

Contact me today to set up a free consultation. 

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