It probably doesn't come as any surprise that I handle my own bookkeeping. After all, bookkeeping is my profession, so it makes sense that I handle it for our business. A marketing consultant probably doesn't outsource their own marketing. If accounting is not your strength, then I highly recommend that you use an outsourced bookkeeping solution. There are several important reasons why I handle my own bookkeeping.
Handling Accounts Receivable And Payable
Two of the things I'm adamant about handling myself (almost 100%) are our accounts receivable and payable. Making sure that cash is coming into the bank is crucial for a small business. Therefore, I make sure that all invoices are being sent in a timely manner. Even if you use an outsourced bookkeeper, you want to make sure that you know how to invoice your customers. The last thing you want to be doing is waiting on your bookkeeper to send an invoice when your customer wants to give you money right now. I also have some help within the business to invoice customers, so I'm not solely relied upon to send invoices.
I also like to stay heavily involved in the accounts payable process. While I will have other key employees make decisions, I like to execute the actual movement of money. It keeps me involved with all of the large expenses in the business, so I am aware of what is going on. Additionally, it is great for checks and balances as I am reviewing each expense. Last, I can manage the timing on when I pay bills and can put them off as long as possible.
Handling accounts receivable and accounts payable gives you control over your cash flow and keeps you involved with the flow of money within the business.
Cash Flow Management
Most small businesses have to keep a tight grip on cash flow. Becoming a master of cash flow management is crucial to the success of your small business. The way that I manage cash flow is by reconciling QuickBooks on a daily basis. While this may seem like a lot of work and a waste of time, I assure you that it is not.
I like reconciling on a daily basis for three reasons:
1. It doesn't take me a lot of time each day; typically only 5-10 minutes.
2. It gives me the ultimate control over my cash flow.
3. My financial reports are always up-to-date for analysis.
Timely Financial Analysis
Since I update QuickBooks on a daily basis (sure, sometimes I skip a day here and there), my bookkeeping is always up-to-date and so are my financial reports. Having access to updated financial reports every single day you operate your small business is powerful.
Every single day, I am able to look at a budget versus an actual report to make sure we are staying on track. I am quickly able to assess if sales are keeping up with the forecast and communicate any shortcomings out to our sales team. I can easily assess our cash position to make sure we will meet all of our financial obligations, such as payroll. The bottom line is that when the books are dialed in, so is your business. An updated bookkeeping system allows you to focus on what really matters, which is growing your business.
Focus On Growth, Not Taxes
Most business owners look at their bookkeeping system as a hindrance. They only see their bookkeeping as a means to filing their taxes. Most people don't like paying taxes, so the whole thought of bookkeeping leaves a sour taste in their mouth.
I don't like paying taxes either, but they are a fact of life in the great country we live in. With an updated bookkeeping system, I meet with our CPA every single year in early December. It is crucial that you meet with your CPA before year end, rather than after the fiscal year ends. The reason is that there is lot more you can do before the calendar turns to a new fiscal year to save on taxes rather than after. I meet with our CPA to get a tax liability estimate and make any key tax decisions. After that, I get back to what matters, which is growing our business.
Everyone gets so hung up on taxes, and getting them filed seems to be painful. Before you know it, April comes and goes and with it you are already into the second quarter of the year. If your bookkeeping is updated then, your taxes are done in a timely manner. At the end of each year, you can focus on developing a budget and a sales forecast. That way, in January, you will hit the ground running, focusing on business growth rather than taxes.
Do you want to focus on growing your business rather than handling your bookkeeping?
