Transcript
Should you do your own bookkeeping? That is an excellent question to ask yourself if you want to be a successful business owner. At some point in your business, you have to make the decision whether it makes more sense for you to spend time doing your own bookkeeping or whether your time is better spent running and growing your business by working “on” your business instead of “in” your business.
By working “on” your business, you are able to grow the business and take it to the next level, where you have employees and professionals helping you to grow your business. So, ask yourself: At what point in your business do you need to give up doing a lot of the administrative work, including the bookkeeping? Perhaps look at your annual revenues. I believe if you have revenues over $300,000 a year, then you need to be looking at working with a professional bookkeeper or accountant to work on your books.
The next question would be: If you then decide to work with an accountant or bookkeeper, what are the tasks that professional is going to do? Nowadays, with modern accounting and bookkeeping, us accountants have a lot of tools that we can use, where we’re not having to deal with all of your paper documents or touching your money or writing checks for you. We have a lot of tools that we can use that are cloud based and enable us to do a lot more for you than 10 years ago, when you probably still had to hire an employee to work on your bookkeeping.
Think also about the cost that is involved in you doing your own bookkeeping. Perhaps you’re thinking, “well it doesn’t cost anything because I do it myself”. But it does cost, and it may cost a lot! Number one, because your books might be messed up, you would need to hire a professional to get them cleaned up. It may be that you need to get a loan or you may need to submit financial statements and financial reports to some of your customers or to organizations, but you don’t have a clean set of financial report. It may cost you in the sense of lost opportunities because a bank may not lend you money; or an organization may not allow you to join them because you don’t have financial statements; or even a customer may require financial statements and you cannot provide financial statements to them if you don’t have them.
Another cost involved, as I mentioned before, is your time. Should you be spending your time on all of these administrative tasks that you’re not trained to do, or that you really don’t know how to do properly? Should you be doing those tasks, rather than spending time growing your business: Getting more clients, taking your business to the next level, hiring employees, setting up systems and processes so you can automate and streamline your business, so you can continue to hire more people. Believe me, at some point, you need to be conscious of the fact that that time will come in your business when you need to make that choice. Don’t wait until the last minute!
Recently, I’ve talked to a couple of prospective clients who are trying to do their own books, and they have revenues of over a million dollars a year. At that point, your business is no longer a baby, and you’re subject to getting into trouble with taxing authorities – local and state taxing authorities, and with the IRS. Again, you probably have to borrow money, and you don’t have clean financials. You’re going to put your business at risk and lose opportunities that you could’ve had otherwise. On top of that, having clarity and visibility into what’s going on with the financial side of your business is key. The only way you can do that is to have meaningful timely financial reports so you can measure the success of your business.
As Peter Drucker said, “You cannot manage what you cannot measure.” It’s very, very important for you to be able to measure how your business is doing, so you can manage it. I’m Veronica Wasek with the 5MinuteBookkeeping.com blog. If you like this video, make sure that you click the like button. Leave a comment, subscribe to my channel, and visit my blog at 5MinuteBookkeeping.com.
