So You’re Thinking of Doing Your Own Bookkeeping
By Dan Boudreau
If you’re getting into business and thinking about doing your own bookkeeping, back away from the shoebox and keep your hands where we can see them.
Learning to manage your business is a full-time job. Learning to be a bookkeeper is also a full time job. Respect both, pick one. Unless you’re already a bookkeeper, you should turn the bookkeeping task over to a qualified professional.
Here are eight benefits to hiring a professional bookkeeper.
- Avoid The Dreaded Shoebox. When I started my first business I thought I would do my own bookkeeping. In reality, I got frantically busy running my business and the books just didn’t get done. After a year of jamming receipts and random bits of paper into a shoebox, I discovered that it’s far more costly to clean up a financial quagmire than it is to set-up and stay on top of a proper bookkeeping system.
- Up To the Minute Financials. Business decisions are based on financial data. Owners need to know where they sit at all times, how much money is in the bank, whether or not the business is profitable, and what the upcoming cash flow needs are. A good bookkeeper will provide the information you need, when you need it.
- Accurate Receivables and Payables. Small businesses too often get into trouble because the owners don’t collect receivables or pay bills on time. Bookkeepers provide accurate and timely lists of receivables and payables, enabling owners to stay on top of paying what’s owed and collecting what’s due.
- Frees You To Focus On Your Business. Small business owners need to invest their time wisely. This means focusing on marketing, selling, building an efficient operation, and especially growing and serving the customer base. These critical functions will easily keep an owner busy full time.
- You’ll Know Your Bottom Line. An income statement is one of the most important financial reports because it shows whether or not your business is profitable. It shows how much revenue a business brings in, what the costs are, and how much profit is left over.
- Use The Past to Project Your Future. A bookkeeper will give you an accurate accounting of all past business transactions, which is the information you need to build a cash flow forecast. A cash flow projection will enable you to calculate your cash requirements into the future and position you to make informed financial decisions along the way.
- You Can Track Your Business Worth. A balance sheet is a snapshot of a business’ worth at specific points in time, for example, monthly, quarterly or annually. It clarifies a business’ assets and liabilities, and tells the owner how much the business is worth.
- You Can Position for Growth. It’s important to have a bookkeeper that can scale up as your business expands. A growing business will demand all your energy and resources without the added concern of training a new bookkeeper or trying to do the books yourself.
Sure, you can do your own bookkeeping; but most well intentioned start-ups just don’t. Many of the new firms that struggle do so because they cut corners on bookkeeping. There will always be exceptions, but too many fledgling entrepreneurs lose their shirts because they attempt to save a few shekels by doing their own books. If you happen to be one who enjoys bookkeeping, so be it. But most entrepreneurs will be further ahead by placing the bookkeeping in the hands of a trusted professional.
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“Dan Boudreau is President and CEO of Macrolink Action Plans Inc. and the RiskBuster Business Plan Oasis at http://www.riskbuster.com Writing your own business plan can be easy, fast and fun! Instantly download a free copy of Dan’s popular fast-track business plan template, The Shell™, when you subscribe to the RiskBuster Business Plan Insider at http://www.riskbuster.com”
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