Bookkeeping – An Expense or an investment
Bookkeeping – An Expense or an investment
It's tempting for small-business owners to want to handle their own bookkeeping and tax preparation. After all, there is a lot of excellent accounting out there to help them. But just because you can do something doesn't mean you should.
There are indirect costs involved with everything that falls into the do-it-yourself category. These include the time you spend doing it yourself instead of tending to other business matters, and the possible missed opportunities that come with not having something handled by a full-time expert in that task.
At some point early on, most small businesses need to hand off their tax preparation, and at least some of their bookkeeping, to professionals.
A bookkeeper is going to be focused on properly recording the day-to-day financial activities of your business. This may sound simpler than the review, planning, and tax-return preparation activities that your accountant engages in.
But without good bookeeping, and good books, accountants can't properly do their job. In fact, many accountants won't even take on a business client if the client cannot produce an accurate balance sheet and is unwilling to hire someone who will get his books in proper order.
Good bookeepers will record all your receipts and expenses, track accounts receivable and payable, and in the course of entering all your financial transactions also create a balance sheet for the business. Book-keepers can handle payroll services for clients; others prefer to work with dedicated payroll companies. Depending on the size of the business, book-keepers may work with a client a couple of days a week, weekly, or even just once a month or quarter.
Since many small business owners can not afford a full time bookeeper, they choose to outsource their book-keeping requirements.
We recently had a client who knew his business so well, that he boasted one client accounted for more than two – thirds of his business turnover. When we presented the figures, he was shocked to learn that the client actually accounted for less than a third in terms of income, and was actually taking up about 80% of his time.
The business owner had no idea of where his business was, he hadn’t looked at sales figures, had a vague idea about his pending orders, and was heading for collapse. Yet he took no notice of our warnings, because he regarded the bookkeeping to be an unnecessary expense, and only wanted the minimum of bookkeeping services.
Six months later he closed the doors on his business, before the creditors declared him a bankrupt. So he lost his whole business for the sake of a few hundred dollars in bookkeeping fees that he regarded as an expense.
Good record keeping should be the life-blood of your business, so ensure that you have a good bookkeeping system in place. Whilst the increasing amount of reporting required by the Internal Revenue for taxation purposes may seem to be a negative for your business, the necessary bookkeeping can generate reports that can be a bonus to the management of your business.
Bookkeeping An Expense or an investment - To learn more about this author, visit John Stewart's Website.
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You may have an excellent understanding of your business, and can say that you have all the information in your head. But how accurate is that information?
It's tempting for small-business owners to want to handle their own bookkeeping and tax preparation. After all, there is a lot of excellent accounting out there to help them. But just because you can do something doesn't mean you should.
There are indirect costs involved with everything that falls into the do-it-yourself category. These include the time you spend doing it yourself instead of tending to other business matters, and the possible missed opportunities that come with not having something handled by a full-time expert in that task.
At some point early on, most small businesses need to hand off their tax preparation, and at least some of their bookkeeping, to professionals.
A bookkeeper is going to be focused on properly recording the day-to-day financial activities of your business. This may sound simpler than the review, planning, and tax-return preparation activities that your accountant engages in.
But without good bookeeping, and good books, accountants can't properly do their job. In fact, many accountants won't even take on a business client if the client cannot produce an accurate balance sheet and is unwilling to hire someone who will get his books in proper order.
Good bookeepers will record all your receipts and expenses, track accounts receivable and payable, and in the course of entering all your financial transactions also create a balance sheet for the business. Book-keepers can handle payroll services for clients; others prefer to work with dedicated payroll companies. Depending on the size of the business, book-keepers may work with a client a couple of days a week, weekly, or even just once a month or quarter.
Since many small business owners can not afford a full time bookeeper, they choose to outsource their book-keeping requirements.
We recently had a client who knew his business so well, that he boasted one client accounted for more than two – thirds of his business turnover. When we presented the figures, he was shocked to learn that the client actually accounted for less than a third in terms of income, and was actually taking up about 80% of his time.
The business owner had no idea of where his business was, he hadn’t looked at sales figures, had a vague idea about his pending orders, and was heading for collapse. Yet he took no notice of our warnings, because he regarded the bookkeeping to be an unnecessary expense, and only wanted the minimum of bookkeeping services.
Six months later he closed the doors on his business, before the creditors declared him a bankrupt. So he lost his whole business for the sake of a few hundred dollars in bookkeeping fees that he regarded as an expense.
Good record keeping should be the life-blood of your business, so ensure that you have a good bookkeeping system in place. Whilst the increasing amount of reporting required by the Internal Revenue for taxation purposes may seem to be a negative for your business, the necessary bookkeeping can generate reports that can be a bonus to the management of your business.
Bookkeeping An Expense or an investment - To learn more about this author, visit John Stewart's Website.
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Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
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