For any business big or small, it is crucial that you have a bookkeeping service in place. The biggest reason for this is so that you know exactly how much money is coming into the business as well as going out the door each month. Without a solid grasp on this, it is a sure fire way to financial ruin.
However, an even more important reason on why you need a solid bookkeeping service for you business is related to your taxes. Whilst we all hate having to pay them, sadly it is a necessity that we pay them year on year. Without having a bookkeeping service in place you run the risk of ending up paying more tax than you’re actually supposed to. Whilst you may get this overspend back, the time in which you’ll receive it can be several months or years depending on how long you’ve been over paying for.
A much more dangerous situation however is in the case of you underpaying your taxes. The problem that this presents is that you when your tax centre finds out about this, you’re going to have to pay every penny back to them. They will also be expecting you to pay a hefty amount of cash in terms of interest payments and, in the worst case scenario, you may be facing jail time. This would happen if they were able to prove that you knowingly avoided paying your taxes since they would class this as a form of theft towards the company.
Due to this, it’s extremely important that you get yourself an excellent bookkeeper. Please note that excellent and expensive are not two of the same. You could get a bookkeeper that costs you the Earth but they may actually do very little to help your business grow as well as preventing any harm from coming to your business or yourself both legally and financially.
A bookkeeper will be able to offer you as many services that you think you might need. For smaller companies, only a basic bookkeeping service is needed. However, these basic services can still offer vital services. These can include a payroll service whereby you don’t need to worry about paying taxes that you are eligible for. A payroll service would also be able to fill in the end of year W-2 forms for you which, whilst not complicated, can be extremely time consuming.
Linked to this is the issue that it’s important that you get a bookkeeper that will be able to provide you with full and summary financial reports. It may be the case that you’re the best business person on the planet but unfortunately when it comes to finances, you’re distinctly lacking. Having said that, it is crucial (as mentioned above) what your incoming and outgoings are. By not knowing this, it is limiting the growth of your business. The reason for this is that you’re not fully aware of the re-invests that you can make in your business to allow it to thrive.
However, another way to look at it is that it will clearly show you if you’re ready for entering the red. This can be an extremely dangerous time for your business and it could end in the failure of it. Therefore, investing in a bookkeeping service will allow you to see the areas in which your business is falling short in. It really is a much more structured approach than someone else sorting out your books to pay your tax for you. Of course, there are also other options that your bookkeeper can organise with you. The take home message is that you do employ the use of one to ensure that your business is running smoothly and within the confines of the law.