One area that almost all of my clients and prospects need to increase their knowledge on is bookkeeping. The issue? They don't understand the rules of bookkeeping. After all, they aren't accountants.
One area that almost all of my clients and prospects need to increase their knowledge on is bookkeeping. The issue? They don't understand the rules of bookkeeping. After all, they aren't accountants.
Most clients and prospects start out by asking what they should do with their bookkeeping. It's often followed by some nightmare story - they tried doing the bookkeeping themselves and it was a mess, or maybe their bookkeeper didn't get things quite right. Either way, it's an area that most are anxious to improve.
When I suggest to them that they study the basics of bookkeeping, they often give me a confused look. I know exactly what that look means: "Yuck! What could be more boring?" But what they usually ask out loud is "Why?"
Here is Why Every Business Owner (and Serious Investors) Needs to Know the Basics of Bookkeeping:
#1 - You Need to Check Your Bookkeeper's Work -
If you do use a bookkeeper, how do you know it is correct? You may think, well, that is my CPA's job! And yes, your CPA can make sure your bookkeeping is technically correct, but nobody knows the ins and outs of your business like you do, so you are much more likely to detect errors specific to your business than your CPA. Plus, you are able to detect errors much sooner since you are able to look at your accounting more frequently than your CPA.
#2 - It Can Save You Time -
Many people hire a bookkeeper, which can make a lot of sense - particularly for larger businesses. But what about smaller businesses - the ones where you spend just as much time (if not more) gathering information for your bookkeeper as you would if you entered it yourself?
It can make a lot of sense for these smaller businesses to do the bookkeeping themselves as it could take less time, particularly if banking and credit card transactions can be downloaded directly into the accounting program. BUT they need to know the basics before starting so they don't end up with a mess!
#3 - Your Reporting Depends On It -
Accurate bookkeeping is the foundation of being able to pull reliable reports from your accounting software. These reports impact the decisions you make, the accuracy of your tax returns and your ability to manage your business.
- You Don't Have to Be An Expert -
While business owners don't need to be experts at bookkeeping, I find that those who understand just the basics of bookkeeping are better able to streamline their bookkeeping and reporting, helping them make better business decisions.
Are you ready to learn the basics of bookkeeping?
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