The Worst Financial Mistake Small Businesses Make
Most small to medium sized business owners are busy. Very busy in fact. In this economy they have to work harder and longer to get the results they need to survive. Longer working hours typically means that the things that don’t directly bring money in the door get pushed aside. Before they know it the back end of the business is suffering.
Business owners who don’t have help for the back end many times end up months behind in their bookkeeping, they don’t have their bank accounts reconciled and because of that don’t really know where they stand financially.
If a dollar was paid for every time a business owner bounced a check because they didn’t have a clue where they stood financially, we could put a dent in the national debt. The worst financial mistake small businesses typically make all the time: Not hiring a professional to take care of the bookkeeping!
Why You Need A Professional Bookkeeper
Quite simply just because you have been writing the payroll checks and paying your invoices, doesn’t mean that you don’t need professional help in the bookkeeping department. Are you paying your payroll taxes and quarterlies on time? Do you know how much trouble you can get into if you aren’t on top of your payroll taxes alone?
Do you know what purchases can help you when it comes to tax time and which ones won’t? Using a professional bookkeeper will help to keep you, the business owner, in the drivers seat.
Income and Expenses?
Here’s another reason you need a bookkeeper. Let’s say you own a service business. You are giving estimates, winning bids and hiring employees. When you complete a job, how do you know if you made a profit? Please don’t say you made a profit because you put a check into the bank! For real, can you answer these questions:
- What was the total job worth? (Look at your original estimate if you don’t know)
- How much did the materials cost you? (Look for all the receipts under the truck seat)
- What was your labor cost? (You know, all the slackers you have on the payroll)
- What were your total expenses? (Not including the Starbucks coffees)
- What was your total profit? (The million dollar question)
If you can’t answer these questions, how do you know what areas need to be improved upon? A bookkeeper can provide you with job costing to help you better manage your resources.
You should concentrate on your business and let the professionals help you with the rest. You didn’t start your business to become an accountant so don’t try to be one. Come tax time you will feel confident you’re up to date, and when you walk into your local bank to get a loan for that new thinga-ma-bob you want at some point, you’ll appreciate the fact that your financials are in good order to boot too!