Many small business owners start out doing their own bookkeeping. For most, it makes sense at first. You’re working on very small margins and trying to figure out exactly what your business structure and strategy are going to look like. You’re often also trying to find vendors, figure out staffing, and working to create something brand new.
If you’re a small business owner and recently went through your first or second tax season, it may have taken you a lot longer than you wanted to get through all of your books. The good news is that a bookkeeping cleanup can make next year easier and help you save more money in the meantime.
Get a Better Look at Your Company History
The best way to make informed decisions about your company’s future is to start by examining its past. You need to take a solid look at your expenditures as well as your income and make sure that everything matches up.
Understanding your financial history can help you answer critical questions like…
- Are your clients paying on time?
- Are your vendors over-charging you?
- Are you undervaluing your products or services?
- Have your credit cards been paid on time?
- Do your earnings match your tax returns?
The more you understand about your cash flow, the better chance you have of turning a strong profit in the future. Updating this documentation on a regular schedule is the ideal way to keep track of everything but if you know you haven’t checked it in a while, it’s important to sit down and do a bookkeeping cleanup.
Identify Tax Break Opportunities
Small and medium-sized businesses have a variety of opportunities for tax write-offs, deductions, and even credits. However, if you aren’t keeping close track of all of your financial documents, tax time can end up being financially devastating.
As long as purchases took place within the last year, your bookkeeping cleanup can help you identify money saving opportunities so you can focus on putting the money you would have put towards taxes back into your business.
Pin Down Discrepancies
Nearly every company’s books have discrepancies. Human error is unavoidable. However, you’re a lot more likely to have large discrepancies if you’ve never done a bookkeeping cleanup before or if you don’t regularly review your company’s financials.
These discrepancies have the potential to cost you thousands of dollars, especially if they show up on your invoicing, credit card, or bank statements. You may discover that you were never paid for a project or that you missed a credit card payment and suddenly owe late fees and are subject to a rate hike. Ultimately, you want to avoid any of these situations.
Get Help with Your Bookkeeping Cleanup
Taking the time to go back through all of your books takes away from opportunities to build your business, but that doesn’t mean you should ignore it. Instead, you should reach out to a professional who knows exactly what they’re looking for.
At PL Consulting, we have a tried and true process for bookkeeping cleanup. We’ll tailor this to your organization’s needs so you can get started saving money right away. Our team is dedicated to helping you come up with a plan that will work for you — and we won’t stop until you’re completely satisfied. Questions on how we can help? Give us a call today at 410-764-3731 or contact us here.