Why Waiting Until Tax Time to Look at Your Books Can Cost You Money
For many small business owners, bookkeeping happens like this:
January through December: Ignore QuickBooks.
Tax season: "Oh no… I need to get my books done."
Sound familiar? If it does, you're definitely not alone.
But waiting until tax time to deal with your bookkeeping can mean missing opportunities throughout the year.
Your books are more than a tax preparation tool
Yes, your tax professional needs your financial information to prepare your tax return.
But your books can do so much more.
Your monthly financial statements can help you understand:
Whether you're profitable
Where you're spending money
Whether your revenue is increasing
Whether your expenses are getting out of control
Whether you can afford to hire
Whether you can afford new equipment
Whether your pricing is working
Whether you need to increase your cash reserves
Those are decisions you may need to make in March, June, September, or November.
Waiting until the following spring means you're making those decisions without current information.
You could miss tax-planning opportunities
Tax preparation tells you what happened.
Tax planning helps you prepare for what is coming.
But tax planning is much more useful when your books are current.
Your tax professional may be able to identify opportunities or strategies, but they need accurate numbers to work with.
If your books are eight months behind, your tax planning may be based on outdated information.
You could miss problems while they're still small
Let's say your office expenses have slowly increased over the past six months.
You might not notice.
But if you're reviewing your monthly financial statements, you may see the trend early.
The same is true for:
Declining profit margins
Increasing credit card balances
Slow-paying customers
Rising payroll costs
Increasing subscription expenses
Unexpected drops in revenue
The earlier you see a problem, the more options you have to fix it.
Your business deserves more than a once-a-year report card
Imagine running your business while only checking your financial results once a year.
You wouldn't do that with sales.
You wouldn't wait until December to see whether you made any sales during the year.
You wouldn't wait until the end of the year to discover that a customer stopped paying you.
Your financial information deserves the same attention.
Monthly bookkeeping gives you a clearer picture
You don't necessarily need to spend hours every week inside QuickBooks.
That's one of the reasons bookkeepers exists.
A bookkeeper can keep your records current while you focus on running your business.
Then, instead of scrambling at tax time, you have a financial history that's already organized and ready.
Don't let tax season be the first time you look at your business numbers
Your business is making decisions every day.
Your financial information should keep up.
If your books are behind, inaccurate, or simply something you've been avoiding, there's no better time to get them organized.
Tax season shouldn't be the finish line for your bookkeeping.
It should be one of the many reasons your books are kept accurately throughout the year.
If you need help getting caught up or keeping your books current, that's exactly what I do at Functional Business Solutions. I provide accurate, monthly reports that will tell you exactly how your business is doing, so that you can make decisions that will allow your business to thrive!!
