Family Bookkeeping Disasters Introduction:
A large number of small companies are family owned. Often times family members help with the bookkeeping and that saves money. The other reason family gets involved is to keep family business inside the family.
Why is this risky?
The bookkeeper manages money and pays your staff. But the job requires training and experience. Mistakes are costly because the books are not done right.
When the books are not done right budgeting is impossible and critical payments to vendors and tax authorities are often missed.
It is critical to pay the correct amount of tax to the right authority on time every time. Tax departments issue heavy penalties for missed payments or late payments.
Correcting tax issues is compounded when a family member simply is not qualified to do the job correctly.
Family Fighting and Stress Can Damage Relationships:
When things go bad family members become abusive with one another. Professional courtesy is not given girlfriend, girlfriend, son or daughter. The yelling and screaming does not help solve the problem. So professionals have to be brought in to correct the mistakes. This is fine, but they bill allot. These bills cause more stress and the cycle continues.
What should you do?
Every small business owner should hire the most qualified person for the job. Saving money on bookkeeping is a small gain when you consider the cost of correcting a year’s worth of errors and sorting out payroll tax problems.
There are five key points to retain from today’s article:
- Hire the best talent you can afford.
- Staff each department with the most qualified professionals your budget will allow.
- Retain the best staff by offering a professional work environment.
- Avoid hiring family. Often times they are not qualified in key departments.
- Grow your business, by having a great plan. A great plan is based on accurate reports and projections.
It is important to prepare a business plan to guide the direction of your company. Bad numbers are misleading. It is likely decisions made using bad numbers will not have a good outcome. While being frugal has merit in terms of cutting overhead, use professionals in all key departments to ensure your success!
Professionals know how to deliver results. Family members may not have the knowledge to grow the business or solve critical issues that are preventing success and growth.
Close family relationships can cause business failure when an unskilled leader makes decisions that are not in the best interest of the organization.
Act in the best interest of your company and hire the best talent you can afford. In return, your business will get the skills, talent, expertise and advice it needs to grow.
Family Bookkeeping Disasters Summary:
It is not worth the stress and aggravation hiring a family member to do your books. They lack training and key degrees in accounting to do a proper job. The result is books that are incomplete, inadequate or incorrect. Either way business decisions that relate to growth and profitability are likely to be incorrect because they are based on data that is not complete.
The best course of action is to hire a professional bookkeeping team that can do your books at a minimum cost. It is not always the case that bookkeeping has to be expensive. The cost savings from avoiding IRS issues and saving your family relationships more than pays for itself.
Bookkeepers are often highly credentialed for their field. Many have industry certifications that go beyond a college degree. To learn more contact us today and I will be happy to discuss the perils of family bookkeeping.