You have started your small business and things are happening. You're busy every day and you're feeling like your business is pretty profitable. How do you know for sure? There are only a couple of possible answers that can be given to this question.
The first answer is, I'm sure because I keep excellent accurate records. That's a great answer! How much time do you spend creating these excellent accurate records? Would that time be better utilized focusing on selling your services or products? Most likely it would be! Financially, you may find that it's better to pay someone to do your books while you spend that time making more money.
The second answer to the question is, I'm not sure. I'm struggling to keep up with the bookkeeping or I don't really know how to maintain my records. Why take that kind of risk? Bring in a professional.
You need a budget. A good bookkeeper can show you how your planned spending compares to your actual spending. It is important that you have a definitive way of tracking your progress. You can't really know whether or not your business is succeeding or failing unless you keep your financial records straight. You certainly would not want to find out your business is failing when checks start bouncing! A good bookkeeper will be able to tell you on any day what your financial situation is and what you are spending where. This will allow you to make informed decisions about how to manage your business.
The IRS is not going to care about your excuses. You will probably need to file Annual Income Tax, Quarterly Sales Tax and if you have employees, Federal and State Payroll Tax, W-2 for employees and 1090's for independent contractors. This does not include all the industry specific taxes and required end of the year reporting. If your records are not accurately maintained, most likely your CPA will be the one to straighten them out. This will cost you approximately 2 to 3 times more than the cost of a bookkeeper maintaining your financial records.
It's very important to the success of any business to know when it's necessary to delegate. Financial record maintenance is a headache you don't need. Bring in a professional with experience. Even if you are good at record keeping, a professional who does this for a living will know things that you don't know. A good bookkeeper is essential to the success and the successful growth of any small business.
