This article on hiring a bookkeeper resonates with me, because I so often see business owners who could have avoided bankruptcy if they had done so.
Entrepreneurs thrive on a DIY mentality: Do everything you can yourself and don’t pay for anything new until you have absolutely have to. It’s especially difficult to justify hiring financial help like a bookkeeper.
With user-friendly software such as QuickBooks available, manybusiness owners feel they should be able to do keep their records on their own, even as they wrestle with finding the time and wonder if they’re doing things correctly.
Prelude to bankruptcy
If you find yourself in one of these typical scenarios, you could find yourself in my law office:
- Business owner is self-employed through the business and owes income taxes on what he or she has earned from the business
- Small business has failed to collect and/or remit payroll, sales and use taxes
- The business has failed to pay its bills as they become due
- Some combination of the above
For #1, #2, and #3 a bookkeeper (or advice from a CPA) could help.
For #2, a payroll service (such as Paychex or ADP) can be a lifesaver on payroll taxes (I can’t really speak to sales and use taxes).
Supervise your bookkeeper
Unfortunately, it’s also typical of small business clients to tell us that their bookkeepers/office managers were robbing them blind, and they just recently discovered it. This speaks to the need for supervision — perhaps by your accountant in addition to yourself. Develop checks and balances so that the bookkeeper can’t manipulate deposits and financial records. Your accountant can suggest them.
Take it from a bankruptcy attorney who’s seen plenty of businesses fail: scrimping on the funds to pay a bookkeeper is often a fast track to business failure.
If you are behind in paying your income taxes bankruptcy may be a solution. Income taxes may be dischargeable in a bankruptcy case. Dischargeability depends on a number of factors, including, but not limited to, whether returns were filed by the taxpayer, and if so, when; when the taxes were assessed; whether the statute of limitation has been tolled by an offer in compromise or other activity; and the timing of the filing of the bankruptcy petition. An experienced bankruptcy attorney can provide guidance on this issue.