Don't Put Off Your Bookkeeping
For many business owners, bookkeeping is probably one of their least favorite tasks, if they do it at all. Here is why staying on top of your finances can save you a lot of money.
Managing a business is not only about meeting inspiring customers, building stunning websites, designing fashionable products, or developing unique solutions.
Unfortunately, it's also about the more basic things, like calculating your company's net income, categorizing your expenses, and comparing your financial and operational performance against your goals.
Many entrepreneurs prefer the creative side of running a business and love spending most of their time interacting with customers. That's why they started their company.
Except perhaps for accountants, bookkeeping typically ranks at the bottom of every entrepreneur's list of favorite tasks. Therefore, it's no surprise that bookkeeping often receives little attention.
That suddenly changes when a business receives an official notice of a missed sales tax filing, underreported revenues, rejected checks, or other heart-stopping letters that could threaten a company's viability and often cost a lot of money to resolve. That is, if an owner is lucky enough to have the money to hire expensive professionals to fix these issues. If not, the situation can quickly deteriorate from bad to worse.
Fortunately, most problems can be avoided with proper bookkeeping.
Does Your Bookkeeping Need an Upgrade?
Here is a simple question to test whether your financial record keeping is adequate:
Do you know how much money your company makes monthly and what its profit drivers are?
If you have trouble giving a concrete answer, you should probably upgrade your bookkeeping and create financial transparency to run your business effectively.
The Secret to Good Bookkeeping
Good bookkeeping is less about simply recording receipts and expenses. You have to do this, too.
Instead, the secret to good bookkeeping lies in reconciling your receipts and expenses with your business bank, credit card, PayPal account, and other official statements.
If you match each transaction with these official documents, you will be surprised at how many receipts and expenses you would have otherwise missed. I know it is time-consuming to reconcile each amount, but this step is critical to achieving financial transparency and basic tax compliance.
My recommendation not to put off your bookkeeping is probably not a crowd-pleaser. However, staying on top of your finances allows you to spend as much time as you want helping your customers and growing your company.
Thanks for reading Digitally Explained! Subscribe for free to receive new posts and support my work.