The Dark Side of Ignoring your Accounting Work
Well, it's December. The last month of the year. Which means that some of us are about to discover the dark side of ignoring our accounting work. Dun dun dunnn!! (Insert ominous music here). In all seriousness though, a lot of business owners only reach out to me when they've been just floating along or treading water, trying to keep things together, but largely ignoring all of their accounting work for the year.
There are a couple of really specific times that they absolutely have a reckoning on where they stand financially since they're not using those financial statements for any management choices. They're just kind of running their business day-to-day by their gut feeling, or some other random KPI, and not necessarily by their financial data. The key time when they realize they need to figure all of this accounting out is at the end of the year.
For example, you’re winding down the year and sending information over to your CPA, and it's basically time to tell the IRS how you did. You have a very short window to send out all those 1099s (by the end of January to be precise) so you really need to know who you paid and how much you actually paid them. Then you have to turn everything over to your CPA to get your tax return done as soon as possible. A lot of clients and a lot of business owners really just come to this sudden realization or reckoning, and here's the dark side: now they’re in a scramble!
Another time that you need to have great financials (and more importantly timely ones) is when you're trying to make a really important spending decision for your business. Perhaps you're not sure just how profitable your year was and you want to make a large investment in something new for your business like a piece of equipment or upgraded technology. Then it's time to come to terms with where you stand financially. You're going to need those financial statements to apply for any loans should you want to finance this big investment. You also really want to know where that investment leaves you profit-wise to help prepare for any tax burden and to help you decide how much you can afford to reinvest in your business before the tax year is over.
Yet another really important time when you may be coming to a reckoning with your accounting is when it's time to hire. You're feeling stressed and overwhelmed by all of the work you have to do so is it time to hire someone to help out? Can you afford it? Should you even be considering it in this labor market? Your financial statements really hold the key to helping you make those sorts of decisions. You have to know that you have clean and accurate financials in order to make that choice wisely to benefit your business.
So, the dark side of ignoring your accounting is not just being unprepared for any one of these occurrences, it’s also having to stress and scramble for information when you really need it. One of the toughest things that I go through when helping a client is just trying to help them remember what the heck they were doing on a specific day, why they would have spent money on something, or what it was they actually purchased. And the further away we get from it, the more difficult it is to recall. Our records become less and less accurate over time. Maybe we missed opportunities for tax deductions or more importantly, we've never had that great financial information on which to base our decisions throughout the whole year in the first place.
That is why I love what I do and working with my clients: I really get to help relieve some of the stresses that are draining to a small business owner and some of the things that are concerning, frustrating, annoying, and inefficient by alleviating that moment of reckoning before it occurs. I provide the accounting framework so that my clients have the time, the skills, and the knowledge to assess where they are financially and to make great business decisions. Give me a call if you want to avoid the dark side of your accounting challenges and find a way to better prepare yourself for your big business decisions.
