Setting Up Your Books

I get calls all the time from business owners asking me about QuickBooks and accounting in general.  A majority of the calls are around April 1^st….hmmm; I wonder why they call at this time of the year?  Yes, the tax man is at their doorstep and they are unprepared for what comes next.  They have spent the entire year running their business and they haven’t had a chance to do the financial side of their business.  They come to me with boxes full of receipts, accounting records that are wrong or with nothing but a long list of transactions.  As a business owner you cannot run your business without up to date financial information. 

 As a business owner you need to be proactive and not reactive.  Being proactive means keeping track of your finances as the year progresses, not the week before tax returns are due.  For some business owners it is a struggle to “keep their books” in order all year long.  The truth is it does not have to be so hard. Your financial records can be as easy or as challenging as you want.

The key is to do it correctly from the start. When you are setting up your company books or accounting you need to understand what you are doing.  This can be accomplished by hiring a bookkeeper or perhaps having someone from your accountant’s office help you.  While that is a great way to get started, you have missed the most important step….understanding what the hell you are doing.

Walking through the process of setting up your company financials is a great way to build your understanding of how your company operates behind the scene.  Understanding the financial side of your business is critical to profitability.  If you don’t know the true numbers of your business, how can you make a strong decision?  It is one thing to estimate numbers in your head, but it is another to see them on paper.

So what does all of this mean?  It means that you need to do a little homework.  You need to take the time to learn the basics about reading your financial statements, understanding what the numbers means, and most importantly understand how important it is that these numbers are accurate.  It is ok to hire someone to do all of this work for you, but remember that it is your responsibility to know when the numbers they are producing for you are WRONG.