Are you afraid to find out what you don’t know? Creating and growing a business is hard and it’s even more difficult without having a good working knowledge of your financials. Many business owners (you are not the only one) do not take time to organize their financial recordkeeping on a consistent, ongoing basis. They know how much money is in the bank, but they don’t know the amount of their profit or how much taxes they owe. Not understanding your financials can be devastating, cause you to be late or overpay taxes, and prevent you from taking your business to the next level.
Here are 3 things that we recommend for small business owners to get their records in order before year end.
1. Commit time to learning about business basics in accounting. Many entrepreneurs had no “book-learning” about accounting while in school. There are free video tutorials and books to help you learn more about accounting. Even if you decide to hire someone to keep your books in order, you still need to be aware of basics. Below is a link to a basic tutorial on Youtube for folks who have no background in accounting. This will help you get started in the learning process about accounting and business financials. https://www.youtube.com/watch?v=VYNTBWBqncU
2. Do “your homework”. It is sort of like going to math class, listening to the instructor at every class, but not doing your homework. Pretty soon, you are so far behind that it becomes more difficult to catch up. When you don’t do your homework, particularly in a subject like math or accounting, you don’t understand how the numbers fit together to get to the right answer. Actually working through your numbers every week will help you understand what they really mean and how to make sense out of them. This knowledge helps you make better business decisions to grow your business. Use a free or low cost bookkeeping software like QuickBooks to do a lot of the work for you. Below is a link to a QuickBooks Online (QBO) tutorial for you to see how QBO works and the process you should use to invoice customers, pay bills, track job expenses, measure profits, and build net worth. https://www.youtube.com/watch?v=H5ihi8BsxwE
3. Monitor your numbers. By knowing more about accounting and then organizing your financial data in a bookkeeping software, you should be in good shape to run financial reports at least every month to see what happened and what didn’t. By that I mean you can look at sales, for example, to compare to previous month or previous year sales. Your reports should show different types of sales, such as revenue from different product sales versus from different services. You can use this information to know how much more you need to do in sales to breakeven or how much you have exceeded what was planned. Using this information, you can share selected data with your staff. This helps you as the owner communicate more clearly with your staff so that you can share with them what they need to do to help the business grow.
We understand how you feel and have helped 100’s of entrepreneurs get things under control before the IRS letter comes in the mail. For more information next steps are make an appointment with us, let us evaluate your specific concerns and then together we will explore the best-fit solutions for you to move forward.
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