Top 5 Consequences of Bad Bookkeeping

“Many small businesses would rather face an angry barbarian horde than tackle their cash flow statement.” – Nicole Fende

As a business owner, it is essential to know that bad bookkeeping can result in a serious financial loss for you. For corporate giants, recovering these damages is not a big deal. They have larger bank accounts to recuperate the losses.

However, for smaller business companies, bookkeeping mishaps can make owners feel the pinch and deteriorate their financial health slowly and gradually.

If you want to enhance profit and increase positive cash flow, make sure to build a strong foundation with dependable bookkeeping and accounting support.

For this purpose, opt for the top bookkeeping and accounting firms in Dubai to mitigate your risks of financial losses. Professional accountants at these firms have years of experience so they can manage your books more efficiently.

Keep reading to know some of the most severe consequences of poor record keeping and accounting.

5 Consequences of Poor Record Keeping

Bookkeeping is the record maintenance of your financial transactions. It typically includes the payroll archives, and records of sales, receipts, purchases and earnings. If these chronicles are not maintained well, it can create different issues for the companies. Here are some of the top-most consequences of bad bookkeeping.

1. Missing Expenses

Missing even one of your expenses, such as a tax return or purchase, can have a tremendous impact on business. It can create a difference in the calculation of your annual business expenditures and the percentage of profit and loss.

2. Delayed Filing

When businesses don’t file on the dot, they suffer from the delayed consequences. For instance, late filing can cause them to pay substantial fines, penalties and interests. Moreover, delayed filing is a big red flag sign in Dubai. It can also result in a potential audit.

3. Incomplete Receipts

Although business owners know to keep receipts saved with them. However, they miss keeping all the supporting information with the cash chits. For instance, with the cash receipt of booking a hall in a hotel, you should also have all the relevant information like why did you book it, for how many hours and so on.

4. Payroll Issues

One of the consequences of poor record keeping is mistakes in payroll and improper deduction in salaries. The issue can not only harm the reputation of your company, but it can also create complications for you in case, an employee sues the company against unfair pay deductions etc.

5. Ambiguities Keeping Multiple Accounts

Bad bookkeeping reduces your chances of keeping your personal and business accounts separate. It causes many uncertainties and mismanagement. Moreover, it also causes difficulties during the audit process. It can also create issues in taxation.

Bottom Line

In short, substandard bookkeeping can create multiple issues for your business. Like late filing, missing expenses, incomplete receipts, payroll issues and many more. All the issues can result in significant financial loss and other complications in money management.

Therefore, the best tip to prevent these consequences of poor record keeping is to acquire the services of the best accounting companies to ensure smooth cash flow and excellent financial health. It is because,

“Making good judgments when one has complete data, facts, and knowledge is not leadership - it's bookkeeping!” – Dee Hock