A bookkeeping service is telling you that January is not the time for bookkeeping. Really? Why would we send this message? The truth is that we really believe that January is not the time to be focusing on your bookkeeping. However, many small business find themselves ensconced and overwhelmed by their bookkeeping and taxes in January, and typically continuing into the spring.
While January is arguably one of our busiest month's year after year that doesn't mean it has to be busy for you as a small business owner. Below I will explain why January is not the time for bookkeeping and what you should be focusing on instead.
Year-end is Over
If you are approaching us now and you haven't done any bookkeeping for last year you are so far behind your competition. How in the world are you running a business without analyzing your small business financials on a regular basis? The truth is you are running blind and making decisions on gut feelings rather than concrete numbers.
I always preach to our customers that the month or two before year-end is when you need to focus in on making sure your bookkeeping is dialed in. You want to do a thorough review of your books before the fiscal year changes. That way closing out the year is as simple as closing out one more month, week, or ideally one day of transactions.
My tradition on January 1st each year is to finalize the bookkeeping for our business as well as my wife's. Typically it takes me less than 15 minutes, but I keep our books updated often. I hit every single new fiscal year running, looking forward, not worrying about catching up my books, but rather focused on growing my business.
Look Forward Not Backward
Most business owners are great at looking at past financial performance, but fail to take the important step of looking forward. It's one thing to keep great books and actually look at your financial reports. However, are you comparing your actual financial performance to your expectations? Are you building a small business budget? While many small businesses build a budget they fail to actually look at their budget and use it to grow.
Analyzing your actual results vs your budget is only the first step you should be taking each month. What most people fail to do is to take their actual results and look at how that affects their future financials. This concept is also known as forecasting. Instead of making knee-jerk decisions based on a gut feeling, make calculated decisions.
A great example of this is hiring when you feel busy. When business owners get overwhelmed their first reaction is to hire some help. However, most fail to put the actual cost of hiring help into their financial forecast to see if they can actually afford it. The reason I say actual cost is because a $20/hr employee costs you significantly more than $20/hr. There are obvious additional costs such as payroll taxes and benefits. However, what about equipment costs, expense reimbursements, and other additional costs? Before making decisions based on a gut feeling, forecast how this decision might affect your future financials to see if it is a positive or negative move for your business.
Never Let This Happen Again
We handle a lot of massive bookkeeping clean up jobs this time of year. One thing we often hear from owners undergoing a big bookkeeping clean up is "How can I work with you moving forward so I never have to do this again?" Believe me a huge bookkeeping clean up job is as painful for us as it is for the client. We focus on maintaining small business bookkeeping systems on a monthly basis. Our goal is to give our clients updated and accurate information when they need it (in some cases every single day). Our bookkeeping service is designed to be a tool that you can use to help make good decisions and grow your business.
Don't let January be a time for bookkeeping ever again.
