In this day and age, businesses have many things to worry about – some include sales revenue targets, employee retention, laws, competition, just to name but a few.
Now imagine this…You have a full-time accountant/bookkeeper who takes care of your books of account and only submits reports to you, splendid, right?
But the problem with that is that it’s a gamble; a gamble in the sense that unless the bookkeeper is a good one, you’re not likely to be aware when things start going wrong. And if they relate to taxes, the problem might only have your attention when the IRS knocks on your door with all manner of demand letters.
Well, my point is that bad bookkeeping can have serious consequences on not just your internal affairs but with the tax man too. Because, if, for instance, the income of a certain period is reported wrongly, the tax thereon will be computed on wrong figures leading to a whole cycle of “wrongs.”
The effects of bookkeeping mistakes on your taxes can be quite unforgiving as we’re about to see below.
Over/Under Payment of Taxes
You realize that both of these things have repercussions on you – one can amount to fraud while the other, simply put, milks your business dry leading to cashflow problems. And with cashflow issues comes solvency issues and within no time, boom – you’re out of business.
Of course, overstated taxes may also get you in trouble with the authorities since they will want to know why that happened. This will lead to an investigation prior to acknowledgment of excessive tax payment and if you’re not as clean as you were when you went for the claim, you might get yourself in loads of trouble.
Fine, Penalties, and Court Suits
Yup, if you’re going to rely on bad bookkeeping records to prepare your tax bill, then you might soon be a guest of the court or face hefty fines/and penalties. You know what they say about ignorance in law, so you understand that no version of “I had an incompetent bookkeeper” will hold water when the IRA sets in or when in front of a jury.
When it comes to taxes, you want to ensure that they are prepared with utmost care to avoid any mistakes whether innocent or not because in the end, we’ve seen that no mistake can ever justify breaking the law.
In the end, you’re only left with one choice, hire an experienced bookkeeper/CPA with adequate experience capable of maintaining proper books of accounts for your business.
We have been offering customized bookkeeping and accounting services to businesses such as yours for (number) years now. We currently work with business across (state), ensuring that they employ the best bookkeeping practices while complying with new/existing tax requirements. Does this excite you as much as it does us?