Love it or hate it, accounting for your results is a necessity for your successful business. But with some creativity, and an effective accounting system, you can make the process much less burdensome.
An effective accounting system drives a shift toward timely and accurate records while minimizing the bookkeeping involved.
Take tax time. If you scramble to piece together financial details at the last minute, you won’t be able to give the process of assembling the whole year’s figures the time it deserves. That may result in incomplete or inaccurate financial statements for the year gone by, and you won’t want to make important decisions based on them.
The key to improving your bookkeeping experience lies in the following suggestions:
Market conditions and consumer demand constantly shift, and your business plan will always require tweaking. Your financial statements reveal the story of the plan’s good and not-so-good elements, so learn to read your story through the numbers. Develop an understanding of what’s conveyed by the income statement as well as the balance sheet. Know why those figures are presented in a standardized format and what they mean. Recognize when the numbers are off because they haven’t been entered properly.
Good financial records convey immediate information about the recent past, and having accurate information immediately available leads to sound decisions. Mistakes such as incorrectly categorized expenses, unexplained discrepancies, and figures that don’t reconcile to outside sources can happen if you don’t update your financial records as events unfold. As a result, your books are missing important elements of your business transactions. And these may not be recoverable; your memory of transaction details may fade with time.
Don’t procrastinate; ensure you check your financial statements regularly. Accounting may not seem time-sensitive until a crisis occurs. Having your finger on the pulse is crucial to averting emergencies.
If it’s broke, fix it
Above all, your business story is incomplete if the accounting system that renders the financial statements is shoddy. When your bookkeeping method consists of a pile of receipts and a pile of invoices, you’re ready to move on to a more advanced process. But don’t replace the piles with a clunky spreadsheet; it’s a poor substitute for standard form financial statements.
Useful and timely financial information is the hallmark of a superior bookkeeping system. You could decide to rely on user-friendly accounting software, which is just as it sounds – easy for the user to get up to speed. The downside of this form of software is that you develop a false sense of security and believe without question that your business transactions are automatically transported with complete accuracy to the software. Sadly, this may not always be the case.
Small-business operators who lack professional bookkeeping support eventually find that going it alone produces results that aren’t as sound as expected. Rather than wrestle with recording data and producing financial records, ensure the comprehensiveness of your statements by turning to an accounting pro.
Your story will read well ever after.