Bad bookkeeping is a problem that impacts businesses of all sizes. Unfortunately, we’re more likely to believe that bad bookkeeping only happens in small, underfunded companies with limited resources. In truth, even the largest corporations have struggled with poor accounting from time to time. If you think your business is immune from this risk, think again! Careless number crunching can cause many different types of tax problems for your business. Not only does bad bookkeeping cost you money in fines and penalties; it also makes it virtually impossible for you to manage your taxes efficiently year after year. Let’s take a closer look at some of the most common negative impacts on your tax liability when your business finances have been managed poorly.
You may end up paying a lot more in taxes than you should.
Bad bookkeeping is like a game of “telephone” where numbers get miscommunicated and misunderstood. It often leads to inaccurate financial information. This means that when you’re ready to file your taxes, you may discover that you owe much more than you actually earned. Unfortunately, without the watchful eye of a professional, it can be very hard to catch.
People will hold you accountable for tax liabilities you don’t actually owe.
Unkept bookkeeping can cause you to misreport tax liabilities. This can lead to an audit, or even a criminal investigation. People who misuse your financial information may try to take advantage of you by claiming you owe them money. For example, your employees might file a false claim, suggesting they worked more hours than they did. Or, they might claim they are due a larger amount on their taxes than what they actually earned. When the business finances are out of order it can cause you to file incorrect information with the government. Misinformation can lead to fines, penalties, and other problems that can become a hardship for your business or destroy your business.
You'll have an almost impossible time preparing your taxes accurately.
Inaccurate records tend to snowball from one year to another and as a result, it will be almost impossible for you to prepare your taxes accurately each year. You’ll need to go back several years and try to find out where the error(s) occurred. Seeking the help of a professional bookkeeper as a means of catch up can be more costly, than if you had simply hired an financial expert from the beginning. It will become a struggle to take advantage of tax deductions, and you won’t be able to accurately plan for the future because you don’t have an accurate financial picture.
It is important to hire a qualified professional. This means a tax strategist that not only prepares your taxes but advises on how to manage your financial picture throughout the year. Correcords Bookkeeping Inc., provides accurate advice on the management of your business books and the transition to preparing and filing your taxes. Get a free quote within 24 hours by visiting our website www.correcords.ca. Accurate numbers is the lifeline of your business and the team at Correcords would be happy to provide the needed support to your business. Call today (204)-202-6059.