Why are small businesses not keen on bookkeeping, even if the consequences are clear? Maybe they feel it’s an unnecessary cost for the business? Let’s take a look in more detail below.
Small businesses face many challenges, and their owners try to juggle between the various tasks as it scales up.
However, some business aspects are critical and forgetting to handle them professionally can have detrimental consequences to the business.
Bookkeeping is a vital part of any small business as the resources are limited and it is in the best interest of the owner to see them allocated and used prudently.
Without proper bookkeeping, it is hard to keep track of where the money is going, and soon, the authorities will start paying visits over tax anomalies among other things.
Here are some of the reasons why small businesses neglect the services of a bookkeeper;
At times, laziness can be the main reason why small businesses do not check their books. Bookkeeping will only take an hour or two every day, and doing that will avoid the pile-up of tasks to be handled.
This way, you can keep your books updated and get a clear picture of where your money is going without having to overwork.
Some owners are lazy and postpone this task since there is no direct pressure on them to do it from a manager or so.
They prefer to look at other things and procrastinate on the bookkeeping jobs until it is time to file the annual returns.
Business owners need to fully understand how much it helps to handle your bookkeeping regularly so that all your records are always updated.
Running a business entails several things. Most of us think that business is just about selling goods and services at a profit.
This way, most entrepreneurs manage their businesses with a focus on increasing sales, improving brand awareness and racking up profits that will help their business grow in the long term.
While some of the things mentioned above things are essential, bookkeeping is equally fundamental.
Aside from that, people who run companies might be engineers, contractors, doctors or modelling experts with very little knowledge of accounting or how it helps a business.
You should get some insight into this part of your business before it takes a toll on it. Bookkeeping helps to analyse the financial position of a business, and this helps in critical decision making.
Cost of Hiring an Expert
The other reason why small businesses do not handle bookkeeping is the cost of doing it. Most business owners are not necessarily experts in this field.
This means they find that learning about accounting and doing it on their own is a considerable task which leaves them with one option; hire an expert.
The downside with this is that hiring a bookkeeping expert is expensive and they might not find it feasible to do this.
Now with no other choice, a business owner will decide to do basic aspects of bookkeeping and not go into the details as it is required.
Some of the reasons why small businesses do not take bookkeeping seriously have been mentioned, and this can have severe effects on the company.
First, it could lead to loss of revenue as there will be no proper documentation about the expenses, making it hard to track what money is being used for.
It could also give employees loopholes for embezzling funds from the business, something that will put it in a bad financial state.
Improper books will not help you to claim annual tax returns, and thus you will end up paying more taxes than you should.
The ATO is very critical on business accounts and will start noticing your business if it is making constant losses.
Bookkeeping is vital, and when you do it well, you won’t struggle anytime you need complete books to transact financially. Find a way of handling this part of your business, and you won’t regret.
If you are looking for a blend of truly personal service and expertise, please call us today on 03 9510 2120 or contact us through our website.