Maintaining your company’s accounting is part of your responsibilities as a business owner. The proper archiving of your business’ transactions, from customer sales to equipment purchases, will start to pile up as your business grows. Although it may be a simple task with the first few years, your company’s growth can be severely affected by the drawbacks of having ineffective bookkeeping systems and practices.
Despite how well you handle your business’ financial accounts, you’ll eventually start feeling the fatigue of managing the upkeep of your business’ accounts. Because of this, many business owners partner up with bookkeeping agencies to help them overlook their company’s financials.
Avoiding major financial blunders
Minor financial mistakes can quickly add up to considerable accounting blunders. For Small to Medium Enterprises (SMEs), this is a catastrophe waiting to happen if it’s not addressed as soon as possible.
If you’re not convinced of the dangers of building up accounting mistakes, here are four warning signs that you’re in dire need of a bookkeeping agency's services:
1. Inaccurate financial statements
Comparing your bookkeeping records with bank statements is an effective way to check if there are any odd transactions to and from your business’ accounts. If your resulting cash balances don’t match up with your bank’s reports, you might not be accurately reporting your finances.
Inaccurate financial statements are often the result of inefficient bookkeeping practices, or your account may be a victim of fraudulent transactions. If you’re unsure of which one you're dealing with, it’s best to hire a bookkeeping agency to make sure that you have accurate data to present to your bank about potential discrepancies on your accounts’ activities.
2. Inflated sales figures
In handling different transactions in your business's operations, you may have caught yourself or your staff performing less than ideal financing practices. If you haven’t set up a business account to have a formal invoice, you’ll end up limiting your payment transaction through cash, or you’d have to use your personal banking account. This will create inflated accounts and lead you to incorrectly mapping your sales figures.
3. Negative payroll balances
Negative balances on your payroll are a sign that you’re not having direct reports on your staff’s payments. If your numbers don’t add up, then you might be giving the wrong amounts to your employees. This can cause a chain reaction of inconsistencies with your records, which leads to improper payroll tax estimates and unreliable quarterly financial reports.
4. Unusable year-end profit and loss data
Your year-end profit and loss reports are your guides in seeing the summary of your business’ performance throughout the year. With these crucial pieces of data, you’ll be able to make the necessary adjustments to your company’s business models to see which areas need improvement.
If your year-end reports are inaccurate or lacking in information, however, you won’t be able to make the right adjustments to your company’s operations. This prevents you from realising your inefficiencies as a company. It can also lead you to maintain harmful business practices without recognising the severity of the damage that it’s doing to your company’s growth.
Conclusion
There’s a valid reason even long-standing companies employ the help of bookkeeping services. This is to ensure that their company’s objectives are given priority over dealing with its accounting requirements, especially when it comes to avoiding the financial mistakes mentioned above. Outsourcing your business’s accounting to bookkeeping agencies allows you to focus on your company’s growth while having access to organised financial reports on your accounts.
Our team of online accountants in Australia is here to give you a hand in monitoring the growth of your business. If you need expert assistance in handling your bookkeeping needs, get in touch with us today to see how we can help you minimise your tax and increase your profit!