I know it is something that you promise yourself every January; this is the year you are going to get a handle on your bookkeeping. But the reality is that you are too busy to handle your bookkeeping, right? Not only that, but bookkeeping isn't really one of your strengths. You don't enjoy bookkeeping and don't see the value in it. But instead of getting help, you constantly slide your bookkeeping to the back burner until it is too late and you find yourself in the same situation each year. So this year, let's change it up and give you a way to actually keep your bookkeeping updated.
Feel The Pain Of A Lack Of Bookkeeping
You are not going to care about keeping your bookkeeping updated until you have felt the pain. That pain from the lack of a bookkeeping system can come in many forms. Maybe you have to clean up your bookkeeping mess by yourself.
Maybe your taxes have not been filed in years and you are not looking forward to dealing with the IRS and a huge tax bill as well as the penalties and interest. It could be that you filed your taxes incorrectly and either over-paid or under-paid by a large amount.
Another common scenario is that you approach a bank for a loan and are astounded when they asked for a profit and loss and balance sheet for the past several years that you cannot supply.
Once you feel the pain of the lack of a bookkeeping system, I guarantee that you will understand the value of bookkeeping and you won't ever fall behind again.
Bring In a Professional Outsourced Bookkeeper
So, you have felt the pain of not keeping your bookkeeping updated, and now you understand the value. However, you still don't have the skill set, time, or desire to keep the books updated. So how can you keep your bookkeeping maintained?
Your best option to keep your books updated is to bring on some help. To do that, you just have to determine if you want to bring on someone internally or outsource it to an external provider.
Hiring an internal bookkeeping is actually a good idea in certain situations, but definitely not in all. If you are a small business, you most likely don't need a full-time person, nor can you afford one. Additionally, what happens when they decide to quit for one reason or another?
Using an outsourced bookkeeping service definitely comes with benefits for a small business. First, outsourcing your bookkeeping is much more affordable than hiring a full-time internal person. You also won't have to worry about anyone quitting and your bookkeeping getting neglected. Typically, an outsourced bookkeeping firm has a team of bookkeepers working on your books; if someone quits, any one of them can take over your account. Using an outsourced solution guarantees a long-term commitment and business relationship.
Be Demanding Of Your Bookkeeper
Now that you are paying someone to handle your bookkeeping, get your money's worth out of them. You should challenge your bookkeeper to be better and provide you with valuable information.
If you have an experienced bookkeeper, you can really push them to a new level. Set clear goals and expectations with your bookkeeper. If you want your books closed by the 5th of every month or by the end of the day each Monday, then communicate that to your bookkeeper.
Ask your bookkeeper what information you should be requesting and aren't. Their suggestions may surprise you, as they may see things that you don't. As time goes on, you will see more value out of your bookkeeping and start to understand how you can use it to grow your business.
Use Your Bookkeeping System To Grow
Honestly, this could be my personal mantra: Your bookkeeping system should be a valuable tool that you can use to grow your business. While you may not understand it or believe it right now, it is true. You just need to be shown how.
In a simple summary, here is how I suggest getting value from your bookkeeping:
1. Update your bookkeeping often. I like to update the books daily, but weekly is also good. At the very least, you need to update and reconcile your books on a monthly basis.
2. Measure stuff. I know real scientific, huh? Seriously, find some metrics that you care about and measure them.
3. Look at reports on a regular basis. Find reports that give you information on your metrics and run them often. If you update your books daily, look at reports every few days. If you update them weekly, look at them weekly.
4. Look forward, not backward. Everyone is obsessed with their past financials. But what's done is done. Take your past financial performance and use it to forecast what your financial future looks like.
5. Take action and pivot. When you are analyzing past financials and your forecast, do you like what you see? Does the future look bleak? If so, make the appropriate adjustments now.
Keeping your bookkeeping updated is all about finding value in it. Once you have a bookkeeping system that is updated and gives you information on your key metrics, you will never let it fall behind again.
Is your bookkeeping a pain that is useless to your business?
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