Ignoring your bookkeeping is like driving a car with no brakes. You might overlook the danger until it’s too late, and you find yourself over the cliff without any way to stop. When do these consequences strike? It could be when an accountant points out that all your records are wrong or when the IRS tells you that they have been sending you notices for years about unpaid taxes. Ignoring your bookkeeping can lead to severe problems down the line, so don’t let this happen! This post talks about some of the costs of ignoring your bookkeeping.
1. You’ll make Payroll Errors:
When you don’t have accurate records, it’s easy to get your payroll wrong. This can lead to penalties and other legal problems for your company. Payrolls are complicated.
You can be fined for not reporting withholding taxes or accidentally including an employee twice in your payroll system, which results in taking more money out of their paychecks than you should have taken. Overpaying someone is also a big problem that could result from inaccurate records, and it too comes with penalties if the mistake isn’t caught on time.
You can be charged a fee for paying an employee too much, and if that mistake isn’t corrected within three days, you may have to pay more money in penalties as well.
Incorrect payroll records could result in lawsuits from employees who say your company mistreated them because of the mistakes you made. The IRS could fine you for errors in your payroll records, especially if you are not giving them accurate information about how much money was earned by employees during a year.
2. You may face tax fines and penalties:
If you aren’t keeping up with your bookkeeping, it can be challenging to file income taxes correctly. When the IRS sends notices saying that they haven’t received certain tax forms and records from your business, this is usually a sign of problems related to poor record-keeping.
The fines associated with not filing information on time or providing inaccurate information to the IRS can be costly and result in criminal charges.
Suppose you aren’t keeping up with your bookkeeping records. In that case, it’s possible for financial mistakes that have been made over several years not to get noticed until the IRS or another government agency is conducting an audit. At this point, you may have to pay extra taxes, interest fees, and penalties.
Ignoring your bookkeeping can also result in an investigation by the IRS if they are suspicious of financial behavior on behalf of your company or employees. If you aren’t prepared for this type of visit from a government agency, it could make things even worse for you down the line.
3. You may not access financing services:
It can be challenging to get financing when you aren’t running your business correctly and haven’t been for a while. Loans or other financial services might not even consider working with your company because of the poor shape they see its finances due to lack of proper bookkeeping.
This could lead to problems obtaining new equipment or supplies for your business, making it even more challenging to run the company. Ignoring your bookkeeping can lead to serious money problems if you aren’t careful with how things are handled daily within your business.
If you don’t have accurate records of transactions and expenses, it’s nearly impossible to file taxes or apply for financing properly. So, don’t let your business become a victim of the costs associated with ignoring your bookkeeping! Keep accurate records and work towards improving how you manage financial data throughout your company. It could save you from problems down the line.
4. You will lose money:
When you aren’t keeping up with your bookkeeping, even if it’s just essential information about the money coming in and going out of your business each month or year, many errors are probably being made. Some small mistakes may not seem like much when they occur throughout the year but think how much money you could lose if you ever caught none of those mistakes.
If your bookkeeping isn’t on point, then it’s impossible to tell how much money is being spent by employees or other groups within your company. This can lead to problems further down the line with taxes and finance-related issues for businesses.
When financial records aren’t accurate, it’s hard to know what kind of financial issues may be occurring within your business. This makes the problems harder to solve and leaves a lot more room for errors along the way while trying to find out where things went wrong.
Ignoring bookkeeping can lead you to some profound money loss if these mistakes aren’t caught right away by the appropriate people. Keep your company’s financial records up-to-date, and you’ll be able to avoid some of these costly mistakes that businesses often face without proper bookkeeping information!
5. You will make poor Decisions:
When your bookkeeping isn’t up to date, you can’t make the best decisions possible for running your company. You may even have employees making poor choices with how they handle money or other financial issues within your business without knowing any better because their records aren’t being kept correctly either.
If you don’t know where expenses are being made throughout your company, you can’t tell where budgets need to be cut or expenses are over-spent. It could result in financial problems that put the future of your business at risk if they aren’t caught and dealt with quickly enough.
When bookkeeping isn’t done correctly within a business, it makes other aspects of running the business more difficult. It’s like trying to run a race with an anchor tied around your ankles; you can’t do it and will likely end up injuring yourself in some way before too long without getting help from someone who knows what they’re doing!
6. It will cost you time:
Having accurate financial records is one of the most important things for running your business successfully. If you aren’t keeping up with how much money is being spent or earned during a specific period, then there are bound to be mistakes in all aspects of bookkeeping that will cost you more than just some pocket change.
When you don’t have your bookkeeping in order, you waste valuable time fixing problems with paying taxes or figuring out where things went wrong regarding specific financial issues.
When all the information about money is scattered throughout different locations and people within a business, it can be difficult, if not downright impossible, for someone who isn’t familiar with the process to figure out what is going on. This makes it difficult for them to fix the problem and can cost you more time than just getting your bookkeeping done correctly in the first place!
7. It is impossible to strategize:
If bookkeeping isn’t done correctly, then it’s impossible to strategize your business plan or figure out how to handle different financial issues that may come up during the following year. This results in much guesswork and playing things by ear instead of having a solid strategy for what needs to be done when specific problems occur.
Getting your bookkeeping done correctly is crucial to the future of your business, and it’s something that should be taken care of as soon as possible before you end up with too many problems piling up throughout the year.
Bookkeeping isn’t an enjoyable task; however, if someone has a system for keeping things organized, they can save time tracking expenses and income throughout the year. This allows them to spend more time doing things they enjoy, like strategizing for their business or figuring out where new opportunities lie, instead of wasting all that valuable time on bookkeeping that could be spent elsewhere!
8. You are at risk of internal fraud:
When you don’t have your bookkeeping in order, it’s much easier for people within your company to commit fraud against the business without being caught. This can be anything from committing social security fraud by not reporting all their income or even embezzling money out of a bank account that isn’t appropriately tracked and covering up where the money has gone.
When bookkeeping isn’t done correctly, it’s easy for people within your company to try and hide specific amounts of money or income that they aren’t reporting because no one knows where the actual numbers are in the first place! This allows them to get away with committing fraud against you without anyone knowing until it is too late, and the damage has been done.
Suppose you have a system to track how much money is being spent and earned during a particular time. In that case, it makes it easier to figure out when someone isn’t reporting their income correctly or any suspicious activity that needs to be investigated further within your company! This can help prevent internal fraud from occurring in the first place.
Having accurate records of how much money is being spent and earned throughout a specific time allows you to keep your employees honest while working for you, which can help prevent internal fraud from occurring before it’s too late!
9. You can’t improve your workplace culture:
Having inaccurate records of spending and earned during a specific time frame can lead to significant problems communicating within your company. This results in misunderstandings, lack of trust, miscommunication, and animosity between co-workers that may not have existed if you had accurate bookkeeping in the first place!
Suppose you can see where money is being spent within your company. In that case, it makes it easier to communicate with your employees about how the business is doing, what they are spending money on, and why certain decisions are being made.
This can improve morale in the workplace by allowing them to make more informed decisions while reducing their stress levels over money issues that may not have existed if bookkeeping had been done correctly.
Improving your workplace culture by having accurate records of what is being spent and earned throughout a particular time can help you have open lines of communication within your business. It allows you to understand where the money is going, so everyone can better understand why certain decisions are being made!
10. You suffer from cash flow problems:
When bookkeeping isn’t done correctly, it can lead to cash flow problems because you cannot see where all your money is going within the company. This means that certain people aren’t receiving their paychecks on time because money hasn’t been deposited into their accounts yet.
Having accurate records of how much money is being spent and earned throughout a specific time allows you to monitor where all the money is going so you know exactly when someone has been paid and who needs more deposited into their account. This can help prevent cash flow problems within your company before they start!
To avoid the consequences that come with ignoring your bookkeeping, it’s crucial to have a knowledgeable bookkeeping team like SwiftBooks in place to track all your income and expenses correctly. Visit swiftbooks.com/contact to get a free consultation on how we can help run your business more effectively!