There are many small businesses within the San Francisco Bay Area and Silicon Valley, and one thing that all these companies have in common is they all need someone to take care of accounting and bookkeeping needs so their business runs smoothly. Many small business owners and CEOs find accounting software to be a bit intimidating. As most business owners have a passion for their products and services, most dread having to crunch the numbers and figure out annual taxes. These types of activities can be excruciating enough that many CEOs procrastinate, until they are facing a major deadline without enough time to properly prepare.
Not allowing proper time to prepare for audits, or important accounting deadlines can result in major operational problems and could potentially lead to late fees, penalties, or even bankruptcy. If you fail to work with a skilled CFO as well as a bookkeeper, it’s only a matter of time before your business faces problems. Let’s go through five specific risks of not hiring a skilled bookkeeper:
Don’t stop short of business’s true potential
The vast majority of modern businesses would like to expand and grow their profit margin. This can be difficult in the face of competitive pressures in tight markets. In order for a business to thrive, revenue needs to increase at an ever-growing rate.
If a small business does not have someone at the helm who understands exactly how much revenue is being generated, it will be a lot harder to measure and respond to the factors that drive revenue growth. If you’re not keeping track of your company’s finances, you’ll never know whether or not it is time to initiate an expansion. Your business may be losing money in all areas, but there is no way to realize it on the surface.
Effective operational scale is a hallmark of a successful business, and an important way for a company to realize its full potential. There can be a scenario where a business has already accumulated enough capital and/or credit to expand to a new location or start a new product line. This is where an expert CFO guiding an experienced bookkeeper will prove to be a great asset to your business. They’ll let you know whether or not you’re ready to move forward with your business expansion.
Stay on top of your business’s performance
As a small business owner or CEO, it is very easy to get caught up in all of the day-to-day matters of your business, and can easily find yourself spending an abundance of time working with your clients or trying to manage your employees. If you don’t have a skilled bookkeeping service in place, you could easily let important financial details about your company slip through the cracks.
Good accounting and bookkeeping is absolutely pertinent for staying up-to-date with your company’s performance. Once you’ve gotten the numbers accurate and in line, you’ll know how well your business is really doing and what needs to be improved.
Poor accounting can hurt employee morale
Another thing to remember is that your workers are not going to work for you, if they’re not getting paid on time. In fact, failing to pay your workers will lead to costly turnover rates. By ensuring your employees are paid in time and in full, you’ll be able to prove that you’re competent and that the business has good prospects. In return, they’ll be much more willing to work harder for you and your company!
Work with a knowledgeable bookkeeper to ensure all payroll expenses are paid on time consistently each and every week.
Poor bookkeeping can disrupt your supply chain
Whether you run a restaurant or technology company, you’ll be required to buy supplies, and your vendors will want to get paid. It would be impossible to run a business without having access to the appropriate supplies, and these supplies will dry up quick if you’re in arrears.
With this in mind, make sure that you pay your suppliers on time. If you happen to have a monthly contract with the supplier, there’s a possibility that you will end up forgetting to pay them in the future. A disruption in your supply chain could lead to serious issues for your business.
Poor bookkeeping can lead to tax penalties and late fees
Finally, all companies must pay taxes on the income they earn. If you own or run a business, you may be required to pay business and personal taxes. Unfortunately, figuring out how much you owe and submitting your payment can be far more difficult than you might imagine. This is further complicated by the fact that failing to pay your taxes on time can lead to penalties and late fees, not to mention the negative impact of having to divert valuable time away from other areas of your business.
This can all be avoided by working with an experienced bookkeeper to ensure that your taxes are up to date and fully paid. This will help you avoid unnecessary expenses and potential legal complications in the future.