It happens every year, somebody brings me boxes of papers, IRS Correspondence, Tax forms, meal receipts, a whole lot of mess, and a bunch of nothing and they say, “here, can you make sense of this?”
Running your business from a shoebox costs you money.
How Bad Recordkeeping Costs You Money
The first and very obvious reason – you now have to pay me to sort and interpret things that you’ve completely forgotten why they’re in the shoebox. That’s going to cost you.
The second reason is that you don’t know what’s going on in your business with poor record-keeping, which makes it difficult to drive your business where you want it to go.
There’s also the client that comes in with no receipts and only a bank statement. Argh. How can I figure out anything?
Which brings us to the IRS. Sure, we’re going to file a tax return, but if your recordkeeping is so poor that you can’t backup the figures on your tax return – watch out. This could really cost you if the IRS decides to fine you and charge you interest and penalties. Yikes.
Ways Bad Recordkeeping Can Cost You
In Summary, here are some ways that bad recordkeeping can cost you.
You will pay someone to sort through your mess.
Without good recordkeeping, you’re probably missing business opportunities.
It’s hard to control costs.
You’ll lose important backup for transactions.
The IRS will eat you alive at audit.
It’s hard to get a perfect tax return.
You don’t need the IRS to fine you.