Managing financial records. A lot of times a new business owner, or for that matter, seasoned business owners, are so engrossed in doing the day-to-day business that the financial records get put in the large “to do” pile. So many hats have to be worn and the hat that is usually disliked the most by a business owner is the financial hat.
Having financial records in a shoe box is one way of keeping track of transactions, but this data needs to be put into either accounting software or a spreadsheet for tracking purposes. A business owner may have a “feel” for how their business is doing, but their “feel” will be taken to a whole new level when they get to see how their business is doing based on their financial statements.
There are a lot of cost effective ways for a business owner to get the financial statements they need: hire a bookkeeper on a part time basis (our firm can offer full service bookkeepers at $56 per hour), train an office staff (if one is available) to do the data entry while still keeping control of the bank and credit card accounts, purchase an accounting software (my preference would be QuickBooks) and automate the download of all transactions from the bank to systematize things or block out a few hours each month from their schedule to enter the data.
Updating the financial records monthly is a much more manageable process than coming to the end of the year and being hounded by your CPA to pull everything together. Who is able to remember what happened a year ago when the questions are asked about a specific transaction? The sooner you update your records, the more clear and accurate they will be.
The monthly financial statements also provide tools for the business owner and CPA to make changes or suggestions right away rather than being so reactionary at year-end. Another huge benefit to having monthly and up-to-date records is planning not only for the business but for tax purposes which can be done each quarter. This will allow the business owner to avoid the dreaded tax return call from their CPA about how much tax they owe. I know this causes heartburn for a lot of clients, but the CPA is not able to provide guidance on what tax will be owing without having the financial statements to know how the business is doing.
Keeping organized financial records can alleviate a great deal of heartburn and keep your business on track.