3 Negatives That Could Arise From Doing Your Own Accounting
A business is an entity that consists of numerous moving parts, all of which need to work together and function as a whole. And as all businessmen know, the singular component that keeps these parts going day in and day out is cash and everything else that relates to it.
In the beginning, managing the company’s accounting duties, such as bookkeeping, on your own is relatively quick and straightforward. However, sticking to this process can quickly become a stressful, discouraging, and even financially draining endeavour once the business grows and gains traction.
If business owners continue down this route to save on costs, here are a few of the counterproductive issues that may arise and lead to losses instead.
Mistaking cash flow for profit
It’s not uncommon to see that the business is booming on paper, but in reality, the company still needs cash. This is because, at the start, it’s easy to mistake cash flow to be profits, when in truth, they are entirely different from one another.
Profit refers to what remains after deducting operational expenses from the revenue, while cash flow is defined as the funds used for the business’s financial obligations. By doing the company’s books on your own, you can put yourself into a false sense of security because the records show that there’s a lot of cash coming in.
With the help of professional accountants, on the other hand, the analysis of the company’s financial data can be easily attained, allowing business owners to accurately determine the status of their company’s financial health.
When running a business, complete and accurate books are essential for many reasons, such as for tax filing, audits conducted by audit firms, forecasting, and cash flow management. Thus, keeping these books correct and up to date requires that every transaction made, whether incoming or outgoing, be recorded on time and without fail.
If small business owners persist in handling their bookkeeping by themselves, it’s not uncommon for them to get swamped by the myriad of other responsibilities on their plate, which can lead to missing a few or several receipts. In the end, attempting to fix this problem will undoubtedly be overwhelming and lead to the wastage of another key business asset, time, which could be better used elsewhere.
Late filing and other penalties
Without prior experience and sufficient knowledge, fulfilling the business’s tax obligations and filing them on time can be rather complicated and time-consuming, potentially leading to missing the deadline.
Moreover, if done incorrectly, the company could also be penalised with hefty fees, which could be easily avoided by outsourcing the task to companies that offer expert accounting services in Singapore.
Without the right people to do the job, accounting mistakes and oversights are bound to occur. When it comes to the business’s accounting, these errors could mean consequences that may significantly hinder its progress towards business goals and, ultimately, prolong the time it takes to reach success.
If your business requires professional accounting experts, OneStop Professional Services can provide what you need. Our team of experienced and certified accountants can handle any and all of your accounting needs, starting with basic bookkeeping that keeps your records straight. In addition, we also offer all other vital corporate services that your business will need down the line, such as corporate financing, taxation services, company incorporation services, and auditing services.