Look, I’ll admit bookkeeping is one of the most boring and mundane areas of business ownership.Why, then, am I spending time talking to you about it? Because I want you to make it easier on you. I want you to tolerate your bookkeeping and financial record system enough that when the end of the month rolls around, you don’t think twice about sitting down and just Getting. It. Done.
For most business owners, keeping the books is a necessary task that takes a back seat to more pressing matters: making sales calls, working with customers, manufacturing your product, etc. So when the end of the month comes around and you realize the books are not only a mess, but not even complete, panic sets in. Dreams of vacation and an island retreat begin entering your mind. “Maybe if I go away for a week, the books will just do themselves.”
Not happenin’, pal.
While accurate, consistent bookkeeping may be a drag, it is vital to the sustainability, efficiency, and growth. There’s no way around it, you’ve gotta do it.
Here are 5 ways to make bookkeeping suck less.
- Hire a CPA. Certified Public Accountants (CPAs) are most commonly talked about during Tax Season, but I assure you their value extends the entirety of the calendar year. While you probably don’t want to hire a CPA firm to do your monthly bookkeeping for you (because they charge by the hour), it’s a smart move to have a CPA take a look at your books once a month, or at minimum once a quarter. They can do a quality check of your books and make sure there are no glaring bookkeeping errors or improper categorizations. Having a CPA take a look at your P/L, balance sheet, and statement of cash-flows is a great way to catch inefficiencies, internal control issues, and poor business practices, and will allow you to rectify those errors before causing considerable harm to your business. To find a CPA in your area, check out the American Institute of CPAs directory page.
- Keep pristine records. The quickest way to get into trouble when you sit down to do your bookkeeping is to not have a paper trail. Bookkeeping is data entry—complex data entry, but data entry nonetheless—so make sure you have accurate and complete The last thing you want to see when reconciling your bank statements is a discrepancy between the bank and your books. Receipts, invoices, check stubs, and purchase orders should all be organized and stored, whether physically or electronically, in a secure location. This goes for cash purchases as well. Just because cash was used, doesn’t mean you don’t have to report the expense or sale; your business, your CPA, and the IRS will thank you for keeping track of each and every transation.
- Find a System That Works for You. If you dread bookkeeping because it means you have to sit at your desk or kitchen table, take your show on the road. Hit the patio with your box of receipts and a homemade margarita. Go sit on the couch and watch Shark Tank with your invoices in one hand and your other on the keypad. Find a way to make it work for you.
Side note: If you’re not using a software solution like PeachTree or QuickBooks, I highly recommend you do. CPAs and tax professionals are well versed on these systems, and can fix mistakes or oversights much easier than if you keep books in Excel or a ledger.
- Understand the Final Product. The reports produced through bookkeeping are more than the sum of their parts. They tell the story of your business’ performance. Are you profitable? How much debt are you servicing every month? Have you built up any equity in the business? All these questions can be answered by looking at your profit/loss statement, your balance sheet, and your statement of cash flows. If you look at your accounts receivable aging report, you can find inefficiencies in how you collect payments, and opportunities to do it quicker. The best website I have found to help walk business owners through accounting questions and financial statement analysis is Accounting Coach. This website saves my clients time, money, and a few bottles of ibuprofen by walking through the basics of bookkeeping and accounting.
- Review Your Information Regularly. Whether it’s once a week or once a month, you should be reviewing up-to-date financial statements on your business. These wonderful reports should be in your hands much more often than just tax season and when you are applying for a line of credit. By becoming familiar with your financial data, you can begin to fix problems quicker, think about growth more realistically, and find ways to improve your product offering.
Follow these 5 simple steps to make bookkeeping suck less. You’ll never enjoy it, but you’ll appreciate the process, the outcome, and the impact it makes on your business.