Financially Adjusted
The Financially Adjusted podcast is for all the current and aspiring small business entrepreneurs out there. I'm Leslie Roth - a virtual bookkeeping business owner- and I'm excited to share my knowledge and expertise with you when it comes to handling the money in your business and life. We'll get into all kinds of money topics: financial systems, budgeting, bookkeeping, setting and working toward financial goals, and the overall management of your finances. My goal is to leave you feeling enlightened, inspired, empowered, and confident as an entrepreneur. Settle in and hit follow! You are not on this journey alone!
For more entrepreneurial financial help, go to www.financiallyadjusted.com.
Financially Adjusted
#22: 3 BENEFITS OF ACCURATE BOOKKEEPING
In this episode of Financially Adjusted, I discuss the three biggest benefits of accurate bookkeeping for small businesses. Whether you're just starting out or are looking to grow, keeping your financial records in order is essential. We cover the importance of financial clarity, being stress-free tax time, and how maintaining professional bookkeeping can open doors to funding and even selling your business. Tune in to find out how accurate bookkeeping can set your business up for long-term success.
Resources Mentioned:
- Episode 10: Get in the Flow with the Right Pros
- Episode 15: How to Stay on Track with Estimated Tax
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Recommended payroll software (affiliate link):
ADP
GUSTO
Recommended bank and the one I use in my business (affiliate link):
RELAY BANK
QuickBooks Online is my go-to accounting software. Get the best discount possible (30% off for 12 months) when you buy with my affiliate link below, through Complete Business Group. Message me at support@financiallyadjusted.com with any questions regarding signing up.
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EVERY DOLLAR BUDGETING APP
My preferred business credit card with cash rewards (affiliate link):
If you have healthy behaviors around spending with a credit card, this is a great one to use and earn cash back. It also links up well with QuickBooks Online. If you have unhealthy spending habits with credit cards, please avoid using one! You need to be able to pay it off monthly and not carry a balance. I use this one for my business and it makes paying bills simple.
CAPITAL ONE BUSINESS CREDIT CARD
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Disclaimer: This content is for educational and informational purposes only. Please consult with an accounting professional for direct advice based on your specific business situation.
Hi there! Welcome to the Financially Adjusted podcast. I'm your hostess Leslie Roth. If you are a small business owner and you're out to learn more about your small business finances and you're striving to manage your money well as an entrepreneur, then you are in the right place my friend. I am pretty stoked about today's topic of bookkeeping. It's near and dear to my heart. I am a numbers nerd and I love organization with numbers which is what drove me to start a bookkeeping business in the first place.
I realize that not everyone gets quite as excited about bookkeeping as I do but I think after I highlight these three amazing benefits that I'm going to talk about today, you'll be a lot more excited about bookkeeping at the end of this episode than you are right now at the beginning. Just stick with me.
Accurate bookkeeping is one of the key foundations to a strong and thriving business and I definitely want that for you. Whether you're just starting out in business, or you've been at this for awhile, today's episode will help you see why keeping your books in check is absolutely essential and needs to be a top priority. Let's get into it.
The first benefit of accurate bookkeeping is financial clarity. This one is huge. Accurate bookkeeping paints you a clear picture of where your business stands financially. Think about this. When you know exactly how much money is coming in and going out it's so much easier to make informed decisions, whether you're deciding to hire new employees, purchase equipment, or opt for new advertising methods.
You need to have this financial clarity to make smart choices. You can't just make bigger decisions in your business just by guessing you're in the right place. You need the actual factual numbers. Without those you're just flying blind and that's how small businesses end up in trouble.
When your numbers are accurate and up to date, you can pull your balance sheet and your profit and loss statement monthly to assess the health of your business in real time. You can immediately see if you're hitting those revenue goals or if there's something that needs adjustment. It's part of your financial GPS, so to speak. And when you use accurate bookkeeping to give you the actual factual picture of what's happening in your business, it enables you to work with real numbers. To create a realistic plan looking forward in your business. I call this your business map or your money allocation plan. This is otherwise known as a budget.
Bookkeeping goes hand in hand with budgeting. It is going to allow you to base your proactive plans, aka your budget, on realistic numbers from your financial reports. You don't want to run your business without accurate bookkeeping. If you're only checking your bank balance and you really don't have a bookkeeping system, you do not have an accurate picture or a plan and it's going to hinder your long-term success.
Now, the second benefit to accurate bookkeeping is all about keeping your sanity and being stress free at tax time. Who the heck doesn't want that? I know tax season is one of the biggest frustrations and most business owners least favorite time of year. But here's the thing, when your books are in order, tax time becomes way less stressful. You're not scrambling to gather receipts, trying to remember that lunch meeting from six months ago and what the heck it was for, hunting down invoices from clients, or just feeling scattered. Instead, everything is already neatly organized. You've tracked your expenses and income properly. You have everything documented in your cloud-based accounting software, and you can simply just let your tax professional know, “hey, this is all done and it's ready to go”.
On top of that, you'll avoid costly mistakes that can come from inaccurate reporting. Don't be that person who overpays or underpays because your bookkeeping was a mess.
Throughout the year, work on keeping your books accurate, keeping them organized and up to date so that that isn't you and you can just breeze through tax time like it's nothing.
Side note - another pitfall at tax time involves having a huge tax bill that you didn't plan or save for. This happens to a lot of people. If you have accurate bookkeeping done throughout the year, you can use your actual net profit that you're getting from your P and L statement to calculate and save for taxes so that you are prepared when that time comes.
I have an episode all about this and I have resources that will help you. I’ll link all of that in the show notes but it's episode fifteen so definitely go back and give that a listen if you haven't already. This is going to save you so much stress at tax time friends.
Alright, I'm going to move on to the third benefit of accurate bookkeeping which is professionalism and opportunity. You've probably heard me talk about this benefit before but it's definitely worth repeating. Accurate bookkeeping shows that you run a professional and well-organized business. This isn't just about day to day operations. It's about setting yourself up for major opportunities down the road. Whether you're looking to sell your business, bring on investors, or secure a loan, having clean accurate financial records is absolutely essential.
When potential buyers, lenders, or investors review your business they want to see solid financials that prove you know how to manage your money and run a success full operation. If your bookkeeping is sloppy and all over the place, or not done at all, it raises red flags and it can jeopardize these opportunities.
On the flip side, well organized financials build trust and make your business more attractive to buyers or lenders. They'll feel confident that they're investing or lending to a company that's been run responsibly and that you're professional.
You might even be passing down ownership to one of your children or a family member. You want to leave them with a blessing and not a huge mess.
Also, if you have a spouse and something happens to you, they will possibly be the one handling the business stuff. Whether it's to step in to run it or just sorting through things to be able to sell it and figure out the next step, it will be much less stressful if they don't have to sort through a mess when it's already such a difficult time in their life.
Keeping your books in order shows the world that you take your business seriously and it will give you confidence and peace as a business owner. It can open doors to growth, funding, and even selling your business for top dollar one day. Maybe one of these benefits resonates with you a little bit more than the other but they are all such huge benefits for your business and something to seriously consider.
If you aren't sure whether or not you should DIY your bookkeeping or outsource it, there's a few things to ask yourself. If I DIY, am I able to ensure that the bookkeeping is accurate and done each month so that I can pull accurate financial reports. This might look like you need to educate yourself, you need to really consider what it takes to do accurate bookkeeping.
If I DIY as my business grows, am I able to continue to maintain my bookkeeping accuracy and timeliness. Now, as you grow it's likely that the volume is going to increase, the complexity of your business is going to increase. If you take on loans, then that's going to make it a little bit more complex. So, you need to consider all of those things. Are you going to be able to maintain it going forward?
Also, if you DIY, another question to ask is, is this the best use of your time or could you outsource this task and use that time to grow your business? Your time is valuable and could possibly be producing more money, more revenue in your business which means more growth.
When you're making this decision be honest with yourself when you answer these questions. If you have a smaller more straightforward business it's more likely that you'll be able to maintain your books with accuracy, but the more complex your business is the more likely it’s going to be that you'll need an outsourced bookkeeper. If you're growing and you're becoming a very large business and a more complex business you might even need to hire in house accounting professionals.
When you're looking to hire an outsourced bookkeeper, or a tax professional or any professional for that matter, just be sure to find someone who's an open communicator and who will deliver your reports accurately and timely on a monthly basis. And you want somebody who's also going to explain them to you. You don’t want to just be handed reports and you're still left clueless. You don't really know what they say. You want somebody who's going to have the heart of a teacher and be able to walk you through those reports, explain them all, and answer any questions that you have.
I have an episode all about how to find and work with the right pros and what that can do for your business. It's episode ten and I'll link that in the show notes as well.
There's a lot to consider from this episode so take time to think about each benefit and ask yourself if you're experiencing these benefits right now in your business and look at what needs to change so you can experience them. As always, remember that action clarity and imperfect action is better than no action at all. Have a great day!
