Wrong! One of the purposes of keeping your accounting records in order is to file taxes. But that’s not the only reason or the most important reason to keep your books up-to-date.

One reason why you should not relax and let your accounting slide now is so that you know the financial stability of your company. Now you can use previous years’ data and look at trends so you can plan for this year. For example, which months produced the most income and why? Which months produced the least amount of income? For those months you need to be prepared and have cash on hand.

This would be a great time to set-up a budget so that when your sales are up, you can save money for when sales are down. Also, analyze why your sales go down. Did you go to less networking events? Did you change your marketing strategy? Are there other factors out of your control that made your sales go down?

Another reason to keep your accounting current is to calculate your quartely estimated taxes due. If you’re self-employed you have to make quarterly estimated tax payments. Some people think that as long as they pay the tax in full on April 15th they are OK, but they are not. You can receive stiff penalties and interest for not paying your taxes throughout the year.

A third reason to keep your books up-to-date is for financing. What if you get stuck this year and need a loan? You want to be able to present fair and accurate financial statements to a bank. And trust me, a lender can tell when you haven’t kept your books up-to-date and have a mess on your hands. That would not help you secure a loan.

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