Flying your business blindfolded?

Do you know someone that is a small business owner? Or maybe you own a small business.  Either way, I think everyone has probably heard the montra of “you should have a bookkeeper, you need to look at those financial reports…blah..blah..blah.”Here is what I have found after owning an online accounting company and working with lots of small business owners over the last 10 years.It’s true that many small business owners think that bookkeeping is optional and it is just another overhead expense. Yes, I believe that to be true, too, to an extent based on a couple of conditions.

Here is why

If you are only looking to have bookkeeping for compliance purposes, like you need to file your taxes, and your tax preparer does not want your box of receipts you have been saving for the last 12 months. Yes, you will more than likely be of the mindset of “I want it fast and cheap…oh, and don’t let me show a profit”.There is very little value to this other than just get it done, and you really don’t  have an interest in what the business did, or how to improve things.

So what’s my bank balance today?

The other scenario is that you may just be logging online to your bank website daily to see the health of your business by what your account balance looks like today.  I refer to this as ‘cash on hand accounting’. (more often than not, this is a disaster waiting to happen). If there there is money in the account you must be doing okay, right?

So yes, I agree with the small business owners that see bookkeeping as just another expense based on the above two scenarios. However, running a business like this is super stressful cause you are flying blind, not very profitable, and most of all…very EXPENSIVE.

A price too high to pay?!?

I have witnessed firsthand the kinds of issues that surface with a business owner following the school of thought that bookkeeping is optional or is just another expense:

• A single business owner paying over $7,185 in bank overdraft fees for 12 months.

• A local business owner has 11 banker boxes of receipts (stuffed into freezer bags, binders, and months of unopened mail), 26 months of no bookeeping records, and 6 corporate tax returns past due.

• IRS notices with intent to levy the small business owner’s bank account

There is a better way to all of this, keep control of your business, and finally know (maybe) for the first time if you are actually making a profit.

If you are not too busy today please give me a call 916-520-8560

- TODD

Todd Lay
SimpleBackOffice
916/520-8560