Aside from the “two sets of books” scenario that provides the fodder for tabloid headlines and old movies, I tend to think of bookkeeping as, well, mundane (apologies to bookkeepers nationwide as well as to my own, Debbie, who’s a real firecracker). Not something sexy, just something that has to get done. Like brushing your teeth or doing the laundry. Ho hum.
But Lynnea Bylund’s May Intelligence Report made me think differently about it. (Lynnea happens to be co-chair of the President’s Small Business Advisory Council.) Just look at the legal (and other) problems that can emerge because of lack of proper bookeeping:
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Losing income because you haven’t kept track of who hasn’t paid you.
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Not qualifying for a business loan because you have nonexistant or insufficent financial statements.
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Over-paying taxes due to overlooked deductions.
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Not being able to sell your business because you have no measure of what the business is worth.
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Losing sleep from stress and anxiety.
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Setting prices at a level that you think is profitable, but actually isn’t.
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Getting into trouble with the IRS or state tax agencies because of missed or inaccurate tax payments, or the inability to provide supporting documentation.
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Deciding to rent and signing the lease for a larger office, but not being able to pay the lease after three months because your financial projections were inaccurate.
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Getting into legal trouble because you are paying someone as 1099 contractor when he or she is in actuality an employee.
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Not focusing on the work and growth of a business because you have no system to accurately monitor its financial health.
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Spending nights and weekends trying to manage the books yourself without sufficient training or software.
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Missing opportunities for business growth and development because critical information is missing or inaccurate.
4 Responses to “The Legal Implications of Bookkeeping”
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May 18th, 2008 at 10:22 am
Thank you Nina!
Frankly, while I am a staunch advocate of solid small business bookkeeping (and QuickBooks, of course), my editorial staff had strong reservations about my penning such a “mundane” article.
Thanks to YOU, I’ve been vindicated!
Sincerely, Lynnea
May 18th, 2008 at 10:57 pm
…bylund’s operation is just what we’re looking for…just tired of going thru expensive ‘experts’ all the time…thank u for the contact
May 21st, 2008 at 11:42 am
In my many years of offering small businesses my QuickBooks bookkeeping services, I’ve had many women as clients. What I’ve observed is a large number of otherwise competent women shying away from hiring a bookkeeper, that is me, or when they did hire me to do their bookkeeping, they complained about the high cost of my services very often. Several years ago I hosted an event for small business women where I offered free starter copies of QuickBooks and free advice on managing a small business from an accounting point of view. It was the least attended event I had hosted and a couple of the attendees were men.
May 26th, 2008 at 4:22 am
Thanks for the article. Very helpful–I think a lot of small business owners sre getting to the point of realization that bookkeeping is very important. I also think some have miscontrued the definition of bookkeeping with tax filing; and since some accountants are shying away from the bookkeeping realm, people are really finding out the importance of keeping good books. Kudos to all the bookkeepers out there!