Poor record keeping is one of the biggest problems for small-business owners, said Lisa Bargsley, a certified public accountant with Bargsley, Andrews & Steinbach in Austin, Texas.
"I consistently preach to my clients the systematic collection of financial information to make their lives simpler," she
But for some business owners, record keeping is haphazard.Some even resort to dumping receipts and invoices into boxes and shopping bags, so everything has to be sorted before they can start working on their returns.Bargsley
said some owners have to hire bookkeepers or other help to unravel the mess.
The answer, of course, is to start using the system that Bargsley
refers to.That means keeping either books and ledgers or using software aimed at helping small businesses keep track of their finances.
For business owners who don't have the time or inclination, the solution is to hire someone to do it.It will probably be cheaper in the long run.
Faulty record keeping can mean missed deductions.
describes many procrastinating clients as flabbergasted that their returns can't be quickly completed and sent out.They usually end up filing for extensions, which can cost more money (for openers, paying a professional to do the extra paperwork). Bargsley
said clients also end up sorry that they didn't seek out general business advice sooner, or follow the advice they did get.She
said some new business owners who have been working in an advice vacuum discover belatedly that obligations such as self-employment taxes should have been paid through the year.Now, they have to come up with money they haven't budgeted for.
"If you have a relationship with a CPA or an attorney, or any professional advisers, check in with them during the year," Bargsley
said."You'll get good answers because there's been a relationship built.Otherwise it can be a shot in the dark."
Many of these problems occur because a business owner is overwhelmed or trying to save money on help and advice.If that's the case, then an owner needs to take a step back and think about ways of running the business more efficiently.The company's survival can depend on it.