13 Apr How to Solve your Small Business Bookkeeping Needs
You do a lot. You could say you’re a small business owner, but you could also say you’re a manager, a sales rep, a customer service lead, a distributor, a designer and more. As a small business owner, the list of what you’re required to do is almost endless. Now, add to that the responsibilities of a bookkeeper, and things can get even more complex.
So, should you do your own bookkeeping?
(Incoming: accounting-speak ahead!)
You have options when it comes to basic small business bookkeeping. The first is to do it on your own with a computer program. If you’re just starting out, this seems the easiest and cheapest. But do you know how to balance multiple accounts? We don’t mean bank accounts, but ledger accounts. You might be tempted to use a single-entry system to save time, since it only takes into account one item per transaction.
It’s similar to using a checkbook, and you input transactions as positive or negative.That’s the way that is the most familiar to most people, but if your business has any kind of asset or liability, or if you provide goods and services before payment, you need to use the double-entry system. In this system, you make both a debit and a credit entry for each transaction.
For example, say you just bought a new grill for your restaurant with $3000 in cash. You’d make entries in two asset columns: cash and equipment. These two entries reflect the single transaction. What’s more confusing is that assets are credit-negative, which means you record the $3000 decrease in cash as a credit. Different types of transactions use the terms “debit” and “credit” in different ways. Usually, software handles this for you, but if you make a mistake it can be a headache to figure out later on down the road.
(Whew, you made it through the dry part!)
Another small business bookkeeping option you have is to hire help for your accounting but only around tax season. This can be an affordable option, but it does have downsides. The main drawback is that this tax person isn’t around to help you the other ten months out of the year.
If you show up with unorganized files and records, you’re paying them to do organization work in addition to helping with your taxes. And if you haven’t kept business and personal transactions absolutely separate, it can become a time consuming process. When you choose to work with us at MiHi Pro, you’ll always be able to reach us year round for any kind of question.
The advantage of a team
Working with an accountant is like adding someone to your team in the sport of business. In fact, you’re adding a highly-skilled and specialized team member. It’s likely that your business operates like a team already. Even if you’re a sole proprietor, you might hand off responsibilities like marketing, shipping, and web hosting to different organizations. Anyone who supports the growth of your business is on your team.
Each team needs players who fulfill key roles, and the bookkeeping role is one that frequently gets left behind. The irony is that negligent or sloppy bookkeeping ends up costing way more than taking on that extra team member would have in the first place.
Spend more time working in your business instead of working on your business
You probably didn’t start a business to spend hours doing payroll and accounting tasks. But you know that issues can come up if you don’t have solid financial documentation. A clerical error in your records could lead to tax penalties or even be seen as fraud during an audit. Solid bookkeeping requires a strict schedule, but a growing business often makes demands on your time in unpredictable ways. At MiHi Pro, we’re here to help. We can work with the software that you have, whether it is system-based like Quickbooks or out in the cloud, to keep your transactions organized and free your time for what matters.
Because your time is valuable. Consider the opportunity cost of spending 5 hours a week bookkeeping. If your time is worth $70 an hour, that’s $1400 you’re spending on monthly bookkeeping. That’s pretty costly when you consider you can work with one of our CPAs for much less.
The old adage: math is hard
Accountants are great because they are specially trained in just that: accounting. Math and accounting courses have a high rate of student failure for the simple reason that they are hard. It takes a certain temperament and skill to crunch numbers all day, and if your small business is anything besides an accounting firm, we’d bet that you would rather spend your time handling orders, meeting with vendors, securing new investment, and probably doing a lot of other things before doing the books.
Whatever your situation, whether you have one employee or a hundred, we’ll be glad to work with you to find an affordable solution. We have the ability to organize your day-to-day transactions across multiple accounts and to prepare clear financial statements, so you’ll always know the health of your business. When tax time comes around, you can be confident that your documentation is organized and up to date, making taxes a walk in the park.