How To Tackle An Accounting Disaster At A Business

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When I started working from home as a freelance contractor, I knew that I was going to need to figure out how to file my taxes. I started paying close attention to my expenditures, and I decided to work with a professional to do my taxes. I was really happy that I had decided to work with a professional after filing for the first time. My accountant helped me to write off some of my expenses, and it was great to see how much I was able to save. This blog is all about the importance of using a professional accountant, and how it can help you.


How To Tackle An Accounting Disaster At A Business

10 May 2023
, Blog

One of the scariest things in business is realizing that your operation's accounting is a full-on disaster. Depending on the severity of the problems, this could leave you with no idea how far your company is from bankruptcy or profitability. Similarly, the company could have tax or even legal exposure. How do you even begin to tackle the situation?

Request Help

Whatever your company's situation is, you need help to address it. Even if you're confident you can handle the problem, bringing in an independent party like business accounting service can provide greater confidence in the eventual resolution of the situation. Also, given that many business accounting disasters come from limited support, just having a licensed professional present can make a major difference.

Charting the Problems

The hardest part is often just getting a handle on what the problems are and how many there might be. An accountant will encourage you to start charting and documenting the problems. You will also need to pull at some threads to see if the issues extend further than you expect.

Once you've charted the problems, the information will guide you through the process of getting the situation under control. Particularly if there are multiple issues, you may need the chart to also serve as a checklist.

Freeze Operations and Accounts

You might not be able to fully freeze everything, but you need to slow your business accounting process down as much as practicable. If a company is bleeding money, the last thing it wants to do is to keep cash pumping through broken processes. Freezing operations and accounts will slow the bleeding and give you a chance to catch up. It also may limit your liability if the outflows create tax, criminal, or civil exposure. Minimally, it demonstrates a good-faith effort to address the situation.

Inform Stakeholders

Everyone needs to know there are business accounting issues. Working with your accountant, explain why you're taking specific steps. Playing it straight with people should reduce the odds that folks will panic and abandon the organization.

Develop a Recovery Plan

By this point, you should have a decent picture of what's going on. It is time to start fixing the situation. Depending on what has happened, this may be as simple as implementing new accounting and business processes or as severe as disclosing the accounting problems to tax authorities. You will have to figure out where the money to stabilize the situation is going to come from. Likewise, you must implement accounting solutions to ensure nothing like this happens again.