A few years ago, I took on a client who needed a bookkeeping company quickly. Their company was behind on their financial data entry and government agencies were breathing down their backs wanting money for various taxes. If I took a picture of the outside the business, their appearance may have attracted many customers. The business cards may have been done in such a way as to entice new clients to use their services. The sad thing is that no matter how good it looked on the outside, the business had internal financial problems. It was not a profitable business but was instead struggling.
As we started to pull things together, we found that they has inexperienced bookkeepers which had caused further problems. Receivables were $100,000 over what they should have been. This may look good with regards to sales, but if it is money posted to your books which you will never receive, you will be required to pay sales tax as well as corporate tax at year end. This could have been as much as $15,000 owing to the government. There were other issues we found in the areas of payables and reconciliations which had not been done properly.
Internally, the business was in rough shape and the owner was constantly trying to find money to pay bills. He honestly did not know if his business was making or losing money and he was constantly stressed.
I wish I could say these problems were solved quickly but it did take several months to work things out.
Today the business is doing better then ever! The picture of the business is not blurred but is clear, as it should be. Profits are much higher and all remittances to the government are paid on time. Why is this happening? Obviously to constantly increase business, but now the owner can see exactly where he is each month because he knows the financial data he is given is accurate and in order. If things start to change financially, he can begin to make quick and precise decisions so as not to fall into the same problems he had in the past.
If you are just starting a new business, it is important to do it right.
If you have been in business awhile, ask yourself a few questions.
Are you trying to look after your own bookkeeping and falling behind?
Are things accurate?
If you have a bookkeeper, are they explaining things to you so that you understand the figures?
Keep the picture of your business clear and sharp so you will be able to make quick and sound decisions to maintain a healthy and growing business.
Feel free to contact me with any questions relating to your business financial records.