If you are a small business owner, say of a Mom and Pop shop, it’s quite common to take a casual approach to keeping accurate financial records. After all, your revenue may seem small and too insignificant to have your accounts constantly updated and monitored, enforce checks and balance procedures and keep your documents systematically. But keeping these financial records properly and up-to-date may be more important than you think.
In tough economic times such as these, it is not uncommon to see small business owners file bankruptcy petitions in efforts to clear their debts and start afresh financially. Many business owners might have received advance payments for jobs they have contracted with their clients. But due to the credit squeeze and increased cost of doing business, they might have spent the advance payments without finishing the job they promised to do. If such a pattern continues, it will inevitably lead to increasing debt and disgruntled clients. I know of a small business owner who did not keep good financial records including records of a 6-figure advance payment from a client whose job he failed to complete. When it became clear his client was about to sue him, this business owner filed a bankruptcy petition.
But unfortunately, his petition was dismissed by the judge because of lack of up-to-date financial records.
So do not take chances. Even though you may be a small business owner, you should still keep accurate records of your income and expenditure and all other business transactions. Do not let bad financial record keeping become a hindrance to a successful bankruptcy petition.
If you are a small business owner struggling with debt and irate clients, call us at (813) 200 4133 for a free consultation on what you can do to discharge your debts through bankruptcy.