A business runs on money, and it is essential to keep a record of all the financial transaction that happen throughout the processing. Bookkeeping is an integral element of every business, be it small or large corporations. How else will you know how much money you are making, what is the loss count and what strategies you need to devise to control the expenditure? Etc. Accurate bookkeeping record is vital to minimize the probability of CPA audit. But many businesses fail miserably in keeping accurate records of all the transaction, leading to stringent auditing and penalties. This happens primarily due to the several misconceptions they have regarding bookkeeping such as:
- BOOKKEEPING ISN’T NECESSARY:
It is essential to understand that book-keeping isn’t a choice but rather a necessity. No matter the nature of your business, whether you operate one or you are self-employed, keeping track of your financial record is necessary.
- NO NEED FOR OUTSOURCING BOOKKEEPING:
- ACCOUNTANTS, BOOKKEEPERS, CPA, ARE ALL SAME:
Bookkeeping and accounting stem out of the same branch but the work they perform is different. The job of an accountant is to take care of the taxes and all the business bank accounts whereas a bookkeeper will make sure that whatever expense has to be done, is done judiciously. These two terms are often confused with Certified Public Accountant who is necessarily a financial advisor helping individual, businesses and conglomerates strategies their finances and attain their financial goals.
- PERSONAL EXPENSE CAN BE PAID FOR WITH BUSINESS ACCOUNT:
This is a common misconception amongst the small business owner who thinks that a slight shift of money from personal to business or vice-versa won’t have any repercussions. This is not true since when a business file as an LLP, S-Corp or LLC, they are provided with legal protection depending upon their corporation category, which they can be stripped off if they don’t abide by the rules. You and your business would be at the receiving end of a hefty lawsuit if caught paying for your expense with your business’s money.
Bookkeeping requires time, knowledge and expertise, which you as a business owner won’t be able to devote. Hence hiring a business accounting service for bookkeeping would be a smarter choice, as along with saving your time and money, you can rest assured that your finances are up to date and adequately sorted.