Jan. 10, 2020 | Updated 9:24 AM ET
Both of these unfortunate closings led to hundreds of employee layoffs and irreversible reputational damage to these known Philadelphia establishments. Thankfully, our local community and economy are able to care for our newly unemployed neighbors.
Stories of financial ruin can be the makings of nightmares for small to midsized business owners — but they don’t have to be. For many smaller businesses, the key to staying on solid financial ground is heeding basic best practices like keeping accurate books.
Bookkeeping is not where a business owner should look to save expenses. While it may be tempting for many business owners to do their own bookkeeping, hiring a qualified professional can save a lot of headaches. Business owners may get caught up in the daily running of the business and let bills and invoices pile up. Invoices could get lost or payments may not be properly logged. To avoid things falling through the cracks when it comes to keeping accurate books, business owners should look to a qualified professional or, at the very least, proven software to keep numbers tight.
In failing to keep accurate books, business owners could be opening themselves up to increased tax payments, audits, payroll issues, future credit issues and more. Any of these scenarios can also lead to future problems obtaining financing for expansion, equipment or other business needs.
According to the U.S. Small Business Administration, keeping accurate books is essential for four reasons:
- Tracking details – Keeping accurate records is critical to tracking information related to customers, sales and inventory. Without carefully tracking this information, inventory could be over- or under-extended and the business could risk losing customers or be on the hook for extra inventory.
- Planning – Proper bookkeeping can also help business owners plan for the next season or the next year. This information is key to business owners’ understanding if and when to boost or reduce staff or inventory, for example.
- Legal Compliance – Business owners are also legally obligated to keep accurate books when it comes to contracts, payroll, certain licenses and insurance, among other things.
- Taxes – As mentioned above, accurate numbers are also critical when it comes to taxes. Business owners do not want to end up in a situation where they are paying more than they really owe in income taxes or — worse — are contacted by the Internal Revenue Service for an audit.
While it may be true that most business owners have an entrepreneurial spirit, they may not all have a flair for numbers. Regardless of a business owners’ fondness or dislike for creating spreadsheets, good bookkeeping is critical to successful operations. Philadelphia presents us with a thriving environment to do business — and following bookkeeping best practices helps a business owner increase their probability of success here even more.