It is what will make you more successful; because it is an activity that can dramatically affect your bottom line and at the end of the day it has been, is, and always will be, about the money!

As an entrepreneur your time is limited as you work IN your business day in and day out. Hey, you have to make money, right? The one aspect of most small businesses that gets neglected is the bookkeeping piece of the business. The problem is that bookkeeping is vital to the ongoing health of any venture. Having accurate information available in a timely fashion is so important. Decisions have to be made and those decisions can only be made if the owner has the right information at his fingertips.

Entrepreneurs make mistakes when it comes to bookkeeping. It is usually one of the following:

  • Collecting all their receipts and storing them in a box for year-end when the accountant can figure it out
  • Buying a sophisticated accounting software program and……
  • Hiring someone else to do the work

Each one of those has its own set of problems; so let’s look at them one at a time.

If you leave your bookkeeping until the end of the year, it is going to cost you a lot more money than if you stay on top of it month in and month out. Accountants are expensive. They’ll have tons of questions and you’ll have to answer them.  Building financial statements from the contents of a shoe box is not the most practical or profitable way to go. You are going to be paying out a lot in fees.

Accounting software programs like QuickBooks and Simply Accounting are programs that take a long time to learn. Unless you are prepared to take more than a few night courses you’ll never really understand how to use them. When you make an entry in one of these programs all sorts of things happen as all different accounts are affected. Make a wrong entry and look out.  These programs and training for them is not cheap.

If you hire someone to be your bookkeeper you better hope that they know your business. They’ll make assumptions based on their limited knowledge of your business and your industry. If they make a mistake, who is going to catch it? You? Nope. You are paying them to make your life easy, remember. When there is an error, it is going to be your problem not theirs. And don’t forget, you are paying them.

Now you know what NOT to do, what is the answer? You have to be your own bookkeeper. Sorry. I know you didn’t want to hear that, but unfortunately I have learned by experience that it is the only way. Is it a bad thing? Absolutely not. It is great because by being your own bookkeeper you stay on top of your businesses’ financial health. You know what is coming in and what is going out. You know everything. And as I stated earlier having accurate information is what you need.

Where do you start? You need to:

  1. Set up a spreadsheet to track your revenues
  2. Set up a spreadsheet to track your expenses
  3. Set up your payroll whether you are a sole proprietor or if you have employees
  4. You have to keep on top of your bank account through online banking
  5. You need to set up a schedule for your government remittances

With these simple things in place you will be able to manage your business and at the end of the year email your financial summary to your accountant so he can generate tax returns for both you and your business and do so quickly and at a lower cost than expected.

Each business is different; but the principles are the same. You collect revenue from sales and pay out money to suppliers, staff and the government. If you do things properly, you’ll not only run a good business, you’ll make money. Why? Simple. For example, if you see that you are not charging enough for your product or service, you’ll change pricing immediately rather than waiting until the end of the year when it might be too late.

Bookkeeping is one piece of business that is most quickly either ignored by a business owner or given away to someone else to worry about. Now you know how wrong that is. Bookkeeping is just another task that you as a business owner have to be responsible for and be happy about it. It is what will make you more successful; because it is an activity that can dramatically affect your bottom line and at the end of the day it has been, is, and always will be, about the money!

 

Paul Morgan, Plan2Profit, 1-844-752-6776