KATY, Texas (Covering Katy News) — As the April tax deadline approaches, small business owners scrambling to organize months of financial documentation may face higher accounting fees, overlooked tax deductions and increased IRS audit risks, according to financial experts.
Kristian Ashmun, founder of Katy-based Kreative Ledger Business Solutions, emphasizes that consistent small business bookkeeping and financial organization are essential to minimizing tax-time stress and maximizing potential refunds.
"Reconciling bank statements is the easiest way to have your books clean and ready to go for tax season," Ashmun said. "Proper financial record-keeping throughout the fiscal year is crucial for tax compliance."
For entrepreneurs and small business owners already juggling multiple operational responsibilities, maintaining accurate financial records often becomes overwhelming, particularly as tax filing deadlines approach.
"People tend to forget what the transaction was for. So it’s best to keep your books up to date monthly or even quarterly because chances are business owners will forget months later, especially if they are scrambling to complete their taxes at the last minute."
Every year, millions of American taxpayers wait until the final weeks or days before tax deadlines to prepare their returns. This last-minute tax preparation rush often leads to costly errors, missed business expense deductions, and unnecessary financial stress.
"The tax procrastination pattern is something we see," Ashmun said. "Business owners who wait until March or April to organize their entire year's finances often face higher tax preparation costs and increased audit risk due to hastily prepared returns. That's where my firm helps. We keep the books reconciled so tax time is a breeze."
Ashmun warns that neglecting professional bookkeeping services has serious consequences beyond tax season for small business accounting.
"Poor bookkeeping leads to poor financial decisions," she explained. "The list of decisions a business owner must make every day often seems endless – how much inventory should be purchased, how much to invest in digital marketing, is it time to open a new line of credit, can you afford to hire a new employee, which bill should you pay first, should you get this new accounting software, can you afford hardware updates, and on and on."
Without current financial data and proper expense tracking, Ashmun says, small business owners are essentially "driving blindfolded" through important decisions, relying on gut feelings rather than accurate cash flow information and account balances.
The risk of IRS tax audits increases significantly with disorganized business finances.
"Handing your CPA a total mess of papers come tax season will not end pretty for either party," Ashmun said. "You will end up paying a much larger bill for the time they are going to have to spend on your tax filing, and while certified public accountants can work some magic, they are still human."
Disorganized accounting records can also result in lost revenue and employee retention issues.
"Getting behind on bookkeeping for your business means falling behind on your accounts receivable and invoice cycling as well," Ashmun noted. "Not collecting on accounts receivable is like giving away free money. Cash flow management is the number one reason that small businesses fail."
She also says business growth opportunities can be limited by inadequate financial record-keeping.
"When it comes time to ask your bank for a small business loan or other line of credit, they will check your financial statements in order to approve or deny your application," she said. "If the bank sees that you have poorly updated records and your bookkeeping is a mess, they may be unable to reach a decision or even deny your request."
Bookkeeping requires a lot of work for business owners who are busy running their business operations, according to Ashmun. She recommends maintaining reconciled books throughout the fiscal year rather than attempting to organize 12 months of business activity under pressure during tax season.
"Having your books reconciled throughout the year means you won't have to reconcile 12 months of business activity in a short amount of time," she said.
For overwhelmed small business owners, Ashmun offers a simple tax preparation tip.
"Don't procrastinate your bookkeeping and tax planning…outsource it to professional bookkeeping services!"
Kreative Ledger Business Solutions
Telephone: 281-849-6955 or in Spanish at 956-532-0459