I was at a party last summer speaking with a long time CPA. She said “Ugh, QuickBooks, it was so much faster when folks just brought in a shoe box of receipts and we 10 keyed the information into our system for tax prep.” Those CPAs are darn fast on the 10 key! The question is not just about speed but about purpose.
The clock is ticking for Corporate and Partnership tax returns and sole proprietor and individual returns are barking at their heels.
Are you now sitting down to enter all those transactions from last year?
If so, my CPA acquaintance may be right. You might be a shoe box candidate. I will wager that if you only enter transactions into an accounting system a couple times a year, you are much slower at it than a 10 keying CPA, even if you have set up an online bank interface. So why do so many small businesses use QuickBooks and the like?
The goal is to know your financial position throughout the year, not just on March 15th. Are you making a profit? What are your fixed costs? Did you go over budget on a customer project? Who owes you money?
Your bank account is not a good barometer of your company’s health. You could be losing money and going into debt but still have money in the bank. See your credit card statement to see what minimum payments do to your long term financial health.
Are you ready to commit to using an accounting system? I encourage every small business owner to make the commitment. Keeping up to date on your bookkeeping whether weekly, monthly or quarterly is worth the investment. Making a profit? Then you can pat yourself on the back for a job well done (and set money aside for taxes.) Consistently working at a loss? Time to figure out how to increase revenue or decrease expenses.
Not keeping accurate accounting records costs. What do you do when you realize a key customer did not pay an invoice due 6 months ago? Ask them for the money? How will that reflect on your professional reputation? Maybe not at all if you are in a profession that is stereotyped as flaky. Notice after 5 months that you are paying for that service you thought you canceled? Have fun trying to get all your money back.
Your accounting system should fit your needs and the effort you are willing to put forth to maintain it. A shoe box works if you don’t invoice customers and don’t have liabilities like credit cards that carry a balance. A couple spreadsheets may work just fine too. QuickBooks and other accounting software can be set up to be very easy and user friendly. It’s well worth a couple of hours of help from a professional to get on the right track, whatever method you choose.
I am now an official QuickBooks ProAdvisor! I am also happy to help with Shoe box, Pen to paper, and Spreadsheet systems.
You can do it and I can help.
Time to get those numbers organized!