Bookkeeping is Good for Business
Warren Buffet sums it up perfectly: Accounting is the language of business. The scope of the phrase goes beyond just the passive action of reading balance sheets, budgets and financial reports. Any language, like any code, needs to be used. It needs to be applied and put to practice. As a rule of thumb so should your bookkeeping activities, which end up being the backbone of your business’s accounting.
You have formed your LLC, you have created your Corporation and now you take the plunge head on to get down to business. Selling products, providing a service, creating content, building software, you name it. As time goes by you have forgotten about your taxes and your bookkeeping. No biggie, it happens. Take notes and bring your accounting practices into your daily business routine. It should be like breathing. The great equalizer of all industries is accounting, we all need it and we all feel better if everything is in place when required. Step number one, and something we often recommend to our clients, is having your accountant on speed dial right after establishing your company. Step two, get familiar with online and offline bookkeeping practices. Here are some ideas.
Establish a process. Even the old shoe box to keep receipts is a start to implementing a process in your bookkeeping routine. Keep your receipts and categorize your filing system. It makes it easier to conduct reviews and to find something specific buried in your archives. Designate one person to follow though on bookkeeping responsibilities. Write.it.down. Yes, as basic as it sounds if you can write a blue print or flow chart, then you would always know what to expect and were to tweak the process to improve results.
Use Software. We keep our physical receipts, always. However, we heavily rely on online software to keep the database going. We use QuickBooks - and no we don’t get anything from Intuit to write about their product - which we have used in different projects for over 10 years. Get familiar and use as many functions as you are comfortable using. Add a skill every so often, take a course even. It is a little bit like having a pet, some sort of a business tamagotchi. You need to feed it data often, care for it when it gets sick and eventually every year it’ll hatch all your necessary input to file your taxes accurately. In addition, it is going to let you read and understand your business on the financial side of the equation and help you take more educated decisions in the future.
Keep you personal finances out of it. It sounds intuitive but in practice many business make the mistake of commingling funds. This carries a bunch of unwanted legal and accounting nightmares. Just don’t and if you have, fix it. If you need help, go to your speed dial and call your accountant.
Run monthly reviews. Set aside an hour or so every month, treat yourself to a fancy cup of coffee and sit down to read about your business in its own language. Read the bookkeeping reports, open the files, make notes about anything that sticks out like a sore thumb or just catches your eye for whatever reason. This data will help you prepare better budgets, craft better forecasts, and make better decisions. All while you enjoy your coffee. When time is up, carry on with business as usual. After a few months it becomes second nature.