What happens when you hire a friend or family member to do the books? I have talked to many (far too many) business owners and prospective bookkeepers who think that “learning QuickBooks” is equivalent to understanding accounting. That’s like thinking learning Microsoft Word means you are an outstanding writer! it’s good to know, but it is not a substitute for the skills and knowledge accumulated from working with many, many clients over the years.
Being a great office manager does not mean your office manager will be a great accountant. They are entirely different skill sets.
We often start working on bookkeeping clean up by reviewing the current state of the books. What do the financial statements tell us? We can generally tell within a few minutes if the bookkeeper who has been doing the books knows what they’re doing. Are fixed assets being treated as expenses? Are credit cards being treated as bank accounts? Is owner draw being treated as an expense? Is the income statement so granular we can’t really tell what’s going on, or are the expense categories reasonable for the business?
We can tell all this with a few minutes review of the financial statements.
Even more importantly, what do the liabilities, especially payroll liabilities and sales tax, look like? When you owe the government money, they get a bit testy if you don’t pay.
It may seem like a huge expense to get a professional firm to handle the bookkeeping and provide business advisory services, but in the end, it will save you money in interest, penalties, and lost income. Remember, there is an opportunity cost involved when you end up dealing with the IRS instead of your business.
Rather than getting your sister in law’s best friend’s cousin’s girlfriend who thinks she might understand QuickBooks to do the books for a few dollars an hour, get a professional firm. It will save you hundreds of thousands of dollars very quickly.
Donna Harris holds a BSci in Accounting and is the owner of Bookkeeping Made Simple. She is currently working on her MBA.
Donna Harris, BSci Accounting, MBA student, founded Bookkeeping Made Simple with the understanding that small businesses is the heart of the American economy. After offering to do books for a friend who said he didn't have enough work to keep someone in the office 20 hours a week, she recognized the need for an efficient, online system. She has 20 years of bookkeeping and accounting experience and is excited to help small business owners achieve their goals. She enjoys spending time with her family and traveling whenever possible. She also loves reading, hiking, camping, cooking, yoga, and fitness. A huge believer in lifelong education, she is currently working on her MBA.