Bookkeeping Keeps Track
With your plan in place, you have to know your progress so you can compare to the plan.
This measure should be strongly weighted in the direction of finances. Without a strong financial control, your business can go down the proverbial tubes — in a flash.
The surest way to get into financial trouble is to not keep track of all of your financial dealings.
This is keeping books.
How will you know where you are if you don’t keep books?
All the goals and plans are for nothing if you don’t have a bookkeeping process firmly in place.
It’s easy to let this part of business get away from you. The last thing you need is to find yourself trying to catch up after weeks of inattention.
I have one client who keeps track in his head. He hasn’t done any real analysis for 5 years.
Is it any wonder he finds himself behind the 8-ball?
Get a Good Start
To start with, bookkeeping or accounting is mysterious and arcane, not to mention generally boring.
Way back in my college days, I took the required accounting courses in my business studies.
I got A’s.
I hated it.
I still don’t relish the mundane and routine pounding in of the numbers, but I’ve learned the importance, and I’ve developed the discipline.
It begins with getting started.
One of the easiest ways to get started is to head off to the Big Box store nearby and get a copy of QuickBooks.
But, spending a bunch of money on a program isn’t necessarily the right way to go about it.
You need to understand your accounting needs before you undertake the purchase of systems.
Computer programs don’t solve problems. They can make things worse if you don’t have the right ones.
This is where your Accountant or CPA is of greatest importance.
Let them interview you and your business and determine your needs. Let them develop your needed Chart of Accounts. Let them recommend the right way to get started for you.
Don’t try to do this analysis and development on your own.
Unless you are skilled in the ways of accounting, you’ll just get bogged down and side-tracked from your prime directive – doing business.
Keep Up the Momentum
Once you get a set of books established, now, make processing the required entries a routine.
Get into the habit of making your entries every day.
You’ll have various sales records to process. Keep track of each sale, each customer, each method of payment. Classify your sales by department or family of transactions. Record the details for later evaluation.
Make the entries in the appropriate journals and programs.
Keep track of every Expense. Keep the Receipts, and make the entries.
Keep your banking records up-to-date. Use your Check Register to record checks and deposits. Record them as you make them.
Make it a habit to keep your entries current.
Every day, if necessary, set aside a few minutes to gather all your details into your bookkeeping system.
Doing this every day eliminates the mad rush at the end of every month/quarter/year.
Make a Strong Finish
Each month, make the appropriate entries and total them all up. Run your reports to illuminate your Sales, Expenses, Profits, and Net Worth.
Compare your progress to your Plan.
Make adjustments in business practice.
Reconcile to the Bank Statement each month.
Make your Payroll Tax deposits on time.
Pay your Bills on time.
Each quarter, make reports and compare to plan.
Each year, prepare your tax returns.
Prepare a budget.
Books Are Your Friend
Instead of ignoring or dreading your accounting books, think of them as your trusted ally and friend.
They will keep you from trouble if you let them.
Don’t let your business get away from you. Keep your Books in order.