These Mistakes Will Cost You and Your Business

These Mistakes Will Cost You and Your Business

You’re a busy business owner. There is an endless stream of tasks and people all clamoring for your attention all day long. And for many owners, some of the first things to get thrown by the wayside are bookkeeping and tax planning. Why do people procrastinate getting these things in order? Because there aren’t any immediate negative effects of doing so.

But the consequences come further down the road. And they are often very severe.

The Major Mistakes Business Owners Make

When it comes to taxes, small business owners will often make one of two mistakes. The first is putting off tax planning until the last minute. Again, the consequences of doing this are not immediately noticeable. You stop thinking about taxes, free up a little of your time, and you feel good. Until tax season rolls around and the hammer drops. Now you’re scrambling, you’re overpaying, and your life is extremely stressful.

The second mistake small business owners make is to try DIY bookkeeping in order to save some money. The problem is that you’ll only save money if you have the skills of a professional bookkeeper. And even if you do, what are you neglecting now that you are trying to do your own books? Your business as a whole will suffer. Not only that, if you don’t have the skills and knowledge of a professional bookkeeper (like the vast majority of business owners don’t), your books will likely be out of date and in total disarray.

Both of these mistakes will cost you and your business.

The Consequences of Procrastination and Bad Books

At the end of the day, most people mishandle their tax planning and bookkeeping in an attempt to save time or money. But in reality, putting these things off or doing them yourself will cost you more of both.

Financial costs – Not keeping clear financial records for your business throughout the year will hurt your business, plain and simple. For example, if you wait until the last minute to update your books, make mistakes because you or your accountant is scrambling, and miscalculate your profits, you’ll end up overpaying taxes if you overestimate your profits (costing your money) or be subject to audits and fines if you underpay (costing you time and money).

Time costs – By updating and keeping tight records of your cash flow, expenses, accounts payable, accounts receivable, and other financials, tax time is much easier for you and your accountant. Numbers all match up, you pay the correct amount, and everything goes smoothly. But if you put off keeping tight records, then you will have to dedicate a huge amount of time at the beginning of the year attempting to get everything in order, or face fines and penalties. That means instead of focusing your time and effort on your actual business, you’re focusing them on playing a stressful game of catch up where mistakes are likely to happen.

Life costs – As a business owner you know that when there are problems at your business, they affect your entire life. More than just costing you time and money, mismanaging or putting off proper bookkeeping and tax planning will end up taking your focus away from your family. You’ll bring more stress and anxiety home. You’ll start to doubt whether you can continue to build and live the life you want to live. These are probably the most expensive costs of all.

How You Can Avoid these Consequences

Effective tax planning and bookkeeping means optimizing your tax situation throughout the entire year, so tax preparation is as easy as possible. It means keeping tight records on all your expenses and income and looking at the small financial details of your business to determine ways to save. It means enhancing your cash flow, so you have more resources at your disposal.

Tax planning and bookkeeping are best done by professionals. You’re busy running your business and your life and probably don’t have time for the minutiae. A professional tax planner can look at things like business expenses, retirement plans, investments, and much more to gain a clear view of your entire business. It’s how you get ahead of the situation and make your company as profitable as possible.

Just because it’s August, and official “tax season” is still months away, doesn’t mean you should keep putting off getting your books and tax situation in order. To continue to wait will cause you and your business to suffer the consequences we outlined.

Put in the work now to save money, time, stress, and headaches down the road.

If you need help understanding your business’s financials and performance and improve it going forward this year, then my team can help. Click here to schedule a call with me.?

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We are launching a paid education platform called The Small Business Resource.

It will include a library of videos covering key topics about tax planning, tax preparation, business strategies, cashflow management, accounts receivable and payable, and much more.

I wanted to ask people in my network for input, in order to make it as valuable as possible for you and your business.

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Please help us help you!!

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