by Ty Kiisel
If you’re like most small business owners, you’ve probably got a pretty good list of things you’d like to get done to prepare for 2015. Getting your business’ financial house in order should be on the top of that list.
Even though everyone understands how important it is to have a handle on what’s going on financially within their business, that doesn’t always make it any easier to spend the time they need heads-down wading through the numbers. The following four tips will help any entrepreneur-turned-bookkeeper:
1. Get Organized
This probably sounds a lot easier than it really is, however getting (and staying) organized means you’ll be able to spend less time in the books because you’ll have all your financial information at your fingertips. This is a particularly worthwhile exercise if you don’t enjoy accounting. I’m always surprised at how quickly things get misplaced if this critical step is ignored.
The trick is to create a centralized location for all the important documents that reflect your expenses and your income. Early on, it’s easy to keep everything in a file drawer at your desk; but as your business grows, so does the amount of paper you need to keep track of. Start by creating individual folders for invoices waiting to be paid, receipts, and check stubs along with cancelled checks stapled to paid invoices—it’s pretty basic organization, but the reward to effort ratio is very high. Combined with a good hanging file system, in a dedicated cabinet, and you can create a filing system that will expand with you as your business grows.
2. Software Can Make It Simple
Early in my career I worked with a guy who liked to keep a manual ledger of everything. He said it made him feel more connected to the numbers and gave him dedicated time to think about the financial health of his business. It worked for him. Fortunately, software tools make keeping the books easier than ever before and nobody has to learn the complicated ledger system he used—but spending some dedicated time thinking about the financial health of your business is always a great idea.
If you consult with your tax accountant, he or she will be able to help you choose the best system for your business, which will likely be the same system they use. That way, instead of pulling reports and formatting things for your tax preparer, they will access your bookkeeping system directly and find exactly what they need themselves. This makes doing your quarterly and annual taxes more seamless and convenient for them—and even easier for you.
3. Find Someone to Help You
In addition to your tax accountant, there are bookkeeping firms anxious to do business with your company. There are also trade groups and other resources you can turn to if you want to take the responsibility upon yourself. Unless you’re a trained bookkeeper or accountant, it just doesn’t make sense to go it alone and ignore all the resources that exist to help you.
Many local community colleges and universities sponsor entrepreneurship centers where you can get some great training and advice. And mentoring groups like SCORE have retired and active business executives who volunteer to help business owners with accounting, marketing, and other disciplines.
In addition to the free services offered by the groups mentioned above, many trade associations offer free seminars or workshops you can attend to beef-up your accounting skills. There are so many resources available to help you, seek out one that fits your needs and compliments your level of accounting experience. Finding them is easy if you search online.
4. Make Sure You Know the Numbers
You don’t need to be a CPA or financial expert, but you do need to understand exactly what’s going on financially in your business. With that in mind, start the New Year learning more about four of the key financial reports every business owner should understand—but many don’t. They include your profit and loss statement, cash-flow projections, accounts payable and receivable reports, along with income and expense reports. If you aren’t sure about what these reports are telling you, your tax accountant or one of the resources mentioned above could help you wrap your head around what you need to know.
And, if they can’t or aren’t willing to spend the time helping you understand the numbers, it’s time to find someone else.
While you’re wrapping up the end of the year, it’s a good time to prepare for 2015 by taking these four simple steps to get your financial house in order. Fortunately, technology and these other resources make it easier than ever before to be an expert in regards to your company’s financial health.
Ty Kiisel is a contributing author focusing on small business financing at OnDeck, a technology company solving small business’s biggest challenge: access to capital. Ty has over 25 years in the trenches of small business, and provides personal experiences and valuable tips to help small business owners become more financially responsible.
romakoma | Courtesy of Ty Kiisel