Outdated Books? The Benefits of Current and Accurate Financial Records
When you are busy running your business, and you do not have a dedicated controller or bookkeeper, it’s easy to let your books go.
Difficult to use ERP systems, uncertainty about how to handle tricky accounting procedures like inventory or fixed assets, and lack of accounting interest make it easy to neglect your financial records. When tax season comes around, you hand them over to your Tax CPA and let them figure it out.
Leaning on your Tax CPA at year-end may seem like the path of least resistance at the time, but having outdated financial records throughout the year can lead to poor decision making and additional time loss in the future.
Below is a list of key benefits of having current and accurate financial records:
Improved Financial Visibility into Your Business
Current and accurate financial records give business owners clear visibility into their business. Working with outdated and inaccurate financial records makes it difficult to properly analyze your business and develop appropriate growth strategies.
Obtain Growth Capital and Create an Exit Strategy
Investors and lenders need to see historical financial records before they will provide capital to your business. Similarly, if you are thinking about selling your business, you will need to get your books cleaned up, well in advance, to receive the highest possible valuation and increase the likelihood of a sale.
Quickly Satisfy One-Off Requests from Third-Parties
Insurance providers, attorneys, accountants, investors, lenders, and other third-parties commonly need organized reports to evaluate the financial position of your business. Often business owners scramble to pull together these requests and it creates stressful fire drills. When your books are kept accurate and up to date throughout the year, these requests become much easier to satisfy and less time-consuming.
Clean books lead to accurate taxes. Your Tax CPA will also be able to identify potential tax benefits and savings. Further, if your historical taxes are inaccurate, then you may be subject to an IRS audit – which can lead to future fines and penalties.
If your company has neglected its financial records or needs them ‘cleaned up’ for any reason, please contact us to schedule a free consultation.