When you own a closely held small business, to say you have a vested interest in its success is an understatement. You started your business to pursue something you love; not to wile away hours fretting over the books. While there might be a temptation to haphazardly categorize expenditures (who wants to belabor the check recording process?) a small time investment yields useful information. There’s truth to the old saying, “Garbage in. Garbage out.”
There’s great value in getting a correct picture of your financial position. When you are able to pull all the numbers together and see concrete indicators of income, expenses, assets, liabilities and equity, you have more than a hunch about how things are really going. Good figures provide you with the proper tools to evaluate and make informed decisions. Of course, if you want to raise additional capital, financial institutions will require an accurate assessment of your operations. Besides that, you work hard, don’t you want to know where your money goes?
There are many approaches to record keeping, from receipts in a shoe box (NOT a recommended method,) to downloading banking transactions electronically, and everything in between. Whether you choose to do the books yourself (it’s amazing how easy it is to procrastinate) or have someone else help with the day to day record keeping. The important thing is to make sure each transaction is recorded accurately, and to be truly beneficial, in a timely manner.
There are tools available to help you - from old school green column ledgers to accounting software packages. The important thing is to establish a system that tracks all financial activity. Once the information is recorded your friendly and skilled accountant can turn those records into a useful reporting tool. When all the pieces come together you’ll have a tool that will free you up to focus on and build the business that you wanted to pursue in the first place. Proper accounting for a small business is more than a nuisance task, it’s critical – a big deal.
This blog was coauthored by Christy Fullerton:
Christy Fullerton is a paraprofessional in the Akron office of Meaden & Moore assisting small business clients with bookkeeping and accounting needs. She is a certified QuickBooks ProAdvisor and will on occasion sort receipts from a shoe box. She enjoys reading, traveling and walking her puppy.