The mention of bookkeeping may bring up a few frowns, but it is an indispensable tool that helps in maintaining accurate financial records of a business. It aims to make the company more profitable by formulating tax saving strategies, organising documentation, and prevents the organisation from getting entangled in lawsuits that may crop up due to mismanagement of funds.
Consequently, bookkeeping proves beneficial in saving money and implementing a successful business plan through well-conceived procedures. It is not just limited to keeping the logs of income and expenditure; rather it is a valuable element in the success of the enterprise. In fact, it saves the business from opportunistic employees who commit tax evasion and accounting frauds. According to the latest news report, commercial Australia businesses are the hardest hit entities as per the KPMG Fraud Barometer.
Still some companies decide to use an in-house staff member to cover for the job which often ends up creating a mess for the business. That is why hiring a professional bookkeeping company in Bunbury, Perth and anywhere in Western Australia is a prudent decision that impacts the future of the business. If you are still wondering how a lousy bookkeeper can affect your bottom-line, here is a list of a few reasons that will put your doubts to rest.
1. A Bad Bookkeeper May Cook The Books
In the dynamic commercial world, one cannot afford to go wrong with accounts as they are of utmost importance while seeking funding. In fact, cooking the books to show higher profit margins can land you in a legal soup while trying to secure capital for the business. Honestly and faultlessly managed accounts are a pre-requisite for getting funds from lenders and banks.
If the books are not in order, no financial institution or private money lender will invest in the business, and such an arrangement for funding can lead to legal implications. A seasonsed bookkeeper will take care to keep track of the bill payments and avoid any debts to maintain a good credit score. This is helpful in developing a reputable image of the company in the market and helps in securing finance easily. Thus, don't make an inexperienced employee take up the job of bookkeeping; instead, outsource it to a professional company.
2. Tax Related Issues
Bookkeeping allows a straightforward reporting of profits for tax filings. It maintains an expenditure profile that assists in identifying tax deductions which in turn help to reduce the burden of heavy taxation on the business.
A professional bookkeeping expert would be well-versed with the tax laws and recent changes in the codes to leverage the deductions and ease the load brought about by the costs incurred in managing the daily operations of the enterprise. If there would be no record of the transactions, then it would be impossible to get the deductions. In fact, the company can end up paying more taxes than it should if it has nobody to guide on the matter.
3. Payroll Errors
Disbursing the salaries of the employee is an essential aspect of human resource and accounts departments. A shoddily managed bookkeeping method can have a harmful impact on the payroll. The checks and balances need to be documented precisely so that each employee gets the right amount.
Bad bookkeeping can lead to payment of inaccurate earnings. Besides, the company can lose many of its clients and shareholders if they are not paid on time or paid a lesser amount than what is due. It can tarnish the image of the brand in the market and can lead to a complete closedown.
4. Accuracy Problems
An inexperienced bookkeeper may ignore the smaller dealings which can lead to long-term consequences. Tracking all transactions will help in maintaining accurate books. Sometimes, the small businesses depend on manual calculations to report the accounts; however, it can lead to serious errors.
Professional bookkeeping ensures account reconciliation which catches mistakes and corrects them in time to make sure it does not affect the company's finances. The standard procedures followed by professionals are more accurate and intrusive and thus leave out any chances of discrepancies.
5. Failing To Spot Advantageous Opportunities
Up-to-date accounts lay down everythings on the table in black and white. They help in understanding how each department, line of products, and distribution channels are performing.
All the documentation including the balance sheets, profit and loss statements, tax deductions, capital flow and receivables aid in spotting the opportunities for further growth and expansion. It gives the business owner a clear picture regarding the available capital that can be utilised for future development.
Poor bookkeeping can hamper the decision-making process and damage the customer and employee relationships. Also, it is challenging to fix inefficiently managed books and recover from their far-reaching effects. Thus, a business can't afford to have a bad bookkeeper. Asking the bookkeeping work to be done by professionals helps to effectively evade the problems mentioned above and guarantees high commercial credit rating which is essential to make a mark in your industry.