15760 Ventura Blvd, Suite 610 Encino, CA 91436
FREE CONSULTATION818-436-2775
15760 Ventura Blvd, Suite 610 Encino, CA 91436
FREE CONSULTATION818-436-2775
Blog
Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

Increase Your Profits Tip 4 – Financial Reports Reveal Fantasy Thinking

Screen Shot 2015-08-07 at 9.48.53 AM

The company was having a very good year, and Ashley was proud of herself and everyone else for years of effort that were finally paying off. The cash balances were growing along with sales. Ashley was thinking some well deserved Christmas bonuses would be the perfect end to this year.

But something was gnawing in the back of Ashley’s mind. There was a sense that it was all too good to be true. She had felt this way much earlier in the year, but had dismissed the feelings. Why spoil the party. It is against the business owner’s creed to go looking for trouble.

The phone call stunned her. The mail she got at home shocked her. It was from the IRS. The reason for the correspondence was the company was behind in employment tax deposits, and did she know she was personally liable for any shortages. She didn’t sleep that night, waiting for a chance to check with her bookkeeper the next day.

“Why are we behind on employment taxes?” she asked, the blood rushing to her cheeks. “There is plenty of money in the checking account.”

The bookkeeper couldn’t even look her in the eye, “We missed a payment way back in January. It was my fault. I was afraid you’d fire me if I told you. Then the next one came due and we didn’t have the funds to pay both, so I just let that one slide also.”

Ashley was afraid she was going to pass out from rage. “I thought we were having a great year, “ she fumed. “Where is our current income statement and balance sheet?”

“I haven’t done one for months,” the bookkeeper murmured. “You haven’t asked, and if you’d seen the statements, you might have figured out the issue. So I wasn’t going to slit my own throat.”

Great companies see an income statement and balance sheet at least once per month. We suggest a flash statement on the 5th business day, and a final reporting by the 15th. The bookkeeper in this scenario was probably correct. If the owner had wanted to be sure the growing bank account was due to profits and not some anomaly, she could have checked the financials. The growing amount in employment taxes due would have triggered the critical question.

The best solution to this issue would be to hire an outside payroll processing and bookkeeping company like ATPP. These two tasks are inefficient when handled by employees compared to the reasonable fees charged by ATPP. In addition ATPP guarantees that your tax information will be prepared on time, so that your tax deposits can be transferred on time, using an automatic system.

If you would like to discuss setting up your payroll processing and/or your general bookkeeping with ATPP, call 818-436-2775