Bookkeeping – How it impacts your business when done poorly
Written by Janelle Solomou, Senior Bookkeeper
Owners and operators of any business are often experts in their chosen field and have a true passion for what they do, however most business owners also see themselves as more than capable of paying a few bills and emailing off a few invoices, it can’t be that hard right?
In fact, nothing could be further than the truth.
Poor bookkeeping can cost your business more than just money. Your reputation as a great organisation to deal with can be damaged if you invoice incorrectly, late or not at all. If you forget to pay bills on time, you can jeopardise supplier relationships and damage your credit rating. These two examples of poor bookkeeping decisions mean you may not be able to get finance when the next business opportunity presents itself and be left behind by your competition.
As an extreme example of poor bookkeeping, a client mistakenly catergorised their wages as sub-contractor fees, meaning that tax and superannuation were not being paid on employee wages, this lead to both legal and financial problems for the business, and as a result outstanding debts and fines.
When an accountant needs to spend additional time correcting bookkeeping errors before they can complete the tax return and financials for the business, the year end costs can be quite substantial.
The truth is that having procedures and systems in place to manage your financial picture is essential to successful business growth. Financial health is the foundation of your business. If you are the DIY type business owner I would encourage you to “know your limits”. If you can’t dedicate the time to learn the necessary guidelines and rules or how to manage your bookkeeping, then consider outsourcing and stick to your true passion and expertise in growing your business.