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The first thing to look at is should you even be handling your own bookkeeping. Ask yourself the following questions to help you decide if you should be handling your bookkeeping. Do you enjoy bookkeeping? Is it making you money? Do you understand bookkeeping? Are you sure you are handling it correctly?
If you answered no to any of the above questions you might want to consider outsourcing your bookkeeping. With an outsourced bookkeeping solution, you get a professional to handle your bookkeeping. Additionally, you should get an entire team who can help you with your bookkeeping. That way, your books are always being maintained. When you have an individual bookkeeper, your books can get neglected if they go on vacation or quit.
Some business owners go the do it yourself bookkeeping route in the hopes of saving money. The problem is, even if they are able to do their own bookkeeping, they are blind as to why it actually costs them more money. Do it yourself business owners tend to try and do everything and it really hurts their business. When you have a to do list that is a mile long you rarely spend your time in an efficient manner and you end up handling tasks that you are not very good at.
Many business owners just do not understand bookkeeping, nor do they want to. However, someone involved with the business needs to understand the bookkeeping, whether that person is an internal bookkeeper or an outsourced solution.
If you show a business owner a profit and loss sheet, most can understand the report, at least on some level. However, ask them what makes up the numbers and whether the report is accurate and most will not be able to answer you with confidence.
A financial report is one thing, but an accurate financial report is another. A good bookkeeper should be able to not only present you with a report, but also explain hw they arrived at the numbers. They should also be able to prove that they are accurate by reconciling QuickBooks. If you are not reconciling all of your QuickBooks accounts and conducting some sort of internal audit on your coding, then you have no idea whether you are even looking at accurate figures. Running your business based on financial reports that you are not sure are correct is reckless and dangerous.
Once you have a bookkeeping system in place that produces accurate information you need to figure out a way to use your bookkeeping as a tool to grow. Running a profit and loss and balance sheet once a month is not a good example of a bookkeeping system that is also a growth tool.
First, identify a number of key business metrics that are critical to the success of your business. Next, build a series of customized financial reports that are tailored around these metrics. Finally, report on these metrics to give you valuable information about the financial health of your business. Use these reports to make key business decisions to keep you on the path to success.
A financial forecast might be the most critical tool that you can utilize. You should create a forecast at the close of every month. I understand that this may seem like a lot of work, re-forecasting every month, but I assure you that once you are in the habit it won't take much of your time. The reason you need to create a forecast every month is because it allows you to constantly be peeking into the future of the finances of your business. Take what happened in the past (good or bad) and what business changes or events you know are coming to make an educated guess about the future of your business finances. A forecast enables you to make critical pivots in your business when they become necessary to survive and thrive.
Is your bookkeeping a constant drag? Is it adding any value to your business?