Owning a small business means that you, as the owner, wear many hats. You need to know about technology, marketing, sales, systems, and you need to know about money and finance. That doesn’t mean you have to be the expert in every area or that you have to do every task yourself; you can hire specialists to manage your small business bookkeeping for you. I know, I have an accounting degree and still retain an accountant!
However, you do want to be sure that you hire the right person and that you understand what they’re doing and why. When it comes to small business accounting and small business bookkeeping, don’t be the person who shrugs and says, “That’s what my accountant told me.” Instead, start from a place of knowledge. Know the truth about small business bookkeeping and these three common myths.
Small Business Bookkeeping Myth#1-You Don’t Need an Accountant
It’s commonplace for many business owners to do their books and taxes. There’s a prevailing myth that you don’t need to hire an expert and that DIY accounting and small business bookkeeping is just as good as hiring a pro. It’s not. Please don’t make this mistake.
The truth is that an accountant and bookkeeper can provide several significant benefits. They can save you money. Your bookkeeper and/or accountant can show you where you’re spending or investing your money and whether it’s benefiting you. They can also point out issues with cash flow, payments, and inventory to help you make the most of your resources and keep more money in your pocket.
Tax time is no time for DIY. Your accountant and bookkeeper can help you make the most of your credits, exemptions, and expenses. Finally, an accountant can help you better manage your cash flow so you stay afloat and stay in business.
Small Business Bookkeeping Myth#2-A Bookkeeper is the Same as an Accountant
BIG Myth! Small business bookkeeping and accounting are very different specialties. A bookkeeper manages the day-to-day recordkeeping of your business. They record transactions, invoice, and manage payroll. Your accountant can prepare your taxes, give advice and insight on your cash flow, profits, and investments, and even develop and/or set up your accounting systems. They prepare statements and can help you reach your business financial goals.
Small Business Bookkeeping Myth#3-You Don’t Need a Bookkeeping and Accounting System
“You don’t need both. Just keep receipts”! Oh boy, is this a myth. It sets you up for poor cash flow, over-payment in taxes, and no idea where your business is financially at any given moment. Instead, look to set up a computerized accounting and small business bookkeeping system. There are many software programs available that are highly rated and can help you manage your money and create a thriving and robust business.
When it comes to the many hats you wear as a small business owner; it’s vitally important to make sure you’ve set your finances up in a way that supports your company to grow and thrive. This means creating systems and, yes, it means hiring experts to assist you and provide the information you need to prosper.
I hope I have impressed upon you how important financial statements are. As a young girl, my dad told me that you could not build a business if you don’t understand the numbers. That is actually why I got an accounting degree because I knew that with that knowledge, I could build any business.
If you need a little help looking at your numbers feel free to find a time on my calendar for a conversation (if there are any available)
Great advice, Michele!
Thanks Roy – It’s been a while. Hope you are doing great. 🙂