Tell us if this doesn’t feel familiar….
Frequently, it feels as though everyone in their field of profession is berating you for doing something the “wrong way”.
The “wrong way” – according to them.
You’re “wrong” because you don’t utilize a specific type of accounting software, you’re “wrong” because you do your own bookeeping, etc. Yet, the truth is, you’re more than open to quality suggestions, it’s the outside hostility and bickering that your plans get all lost in the noise.
When it comes to your businesses finances, there are more efficient methods of bookkeeping, and there are less efficient methods of bookkeeping. Instead of trying to convince you that what you’re doing is “wrong”, we want to show you the common financial weaknesses we see in businesses and present more effective solutions based on what has worked for our clients.
Keep in mind that while many businesses share these weak points, there is not a one a one size fits all approach. To find the solution(s) that best fits you and your business, you need a solid understanding of your company as well as the different types of services intended to meet your needs. A financial professional can help walk you through this.
Keep reading for the 8 Common Bookkeeping and Accounting Weaknesses we see in companies…
Not Using Accounting Software:
We see this often: small to midsize business owners trying to use excel for their bookkeeping.
Don’t get us wrong, Excel can be a powerful, low-cost tool to meet your calculation needs.
However, it does not provide any additional functionality such as invoicing, statement, bank feeds & reconciliation, contacts, payroll, time billing, reports, graphs and more. Additionally, due to its open nature; you can easily find yourself with countless worksheets, complex formulas and a headache trying to figure out how things happen.
It’s not suitable if you’re looking to grow, attract investors, get a loan, pay taxes, survive a tax audit, or even figure out why your books stopped balancing last month.
If you are serious about your growth it’s important to know that it is not the alternative of bookkeeping software.
There are free or low cost alternatives available for your small business accounting needs. In fact, many are comparable to the price you pay for Excel.
Accounting software can help to manage payroll and inventory, automate bank reconciliation, integrate to other data sources. The majority of them are easy to learn and there are no formulas or programming required. Additionally, online backup and sharing abilities with your accountants over the cloud makes for easy collaboration,and much more.
2. Not Managing Books on a Monthly or Quarterly Basis:
You may be wondering why it’s beneficial to manage your books on a monthly basis. For starters, you can get your books up to date at one time, providing you a better understanding of where your business financially stands.
Because it’s easy to recall the nature of each business transaction at month end – rather than year end – you can accurately record transactions while decreasing chance of error.
Finally, you can use the monthly data to check business performance and to correct financial mistakes on time before it affects your business cash flow.
3. Not Separating Personal and Business Transactions:
No matter the size or structure of your business, you should have separate bank accounts for business and personal needs.
This removes lots of confusion and you can avoid the hassle of separating everything at year end.
Additionally, you can keep an eye on business money and you’ll think twice before spending business money on personal usage.
4. Not Managing the Relevant Documents:
Everything starts from a small habit.
Maintaining each and every receipt is overwhelming, however, mobile phones provide updated solutions to simplify this process. In fact, all you need to do is take a quick picture of the receipt and a specialized software – such as Quickbooks or Zoho- gives you the special functionality to store the expense receipts.
You most likely use your phone for various business purposes, so why not utilize a multifaceted accounting application on the go?
5. Doing Bookkeeping on Their Own:
We commonly hear business owners say that they do their own bookkeeping, and while this may work for select individuals, others choose to struggle through this responsibility because they fear paying for professional services.
- Do you have that time?
- Do you understand accounting fundamentals?
- Are you closing your books on a timely basis?
- Are you submitting your taxes on time?
If yes to all, that’s great, if not, we strongly advise that you seek help. The time and frustration you can save by involving a financial professional will far outweigh any associated costs.
6. Not Having a Budget:
Maintaining a monthly or quarterly budget and reviewing it periodically is a small but effective financial habit. This will help you in personal and business finance.
However, keep in mind that the effectiveness of a budget is in line with the accuracy of your books.
7. Getting Help Last Minute
Instead of booking a meeting with their bookkeeper or accountant in advance, many business owners tend to ignore reaching out until they suddenly face a problem – and by then find their accountants schedules are filled.
We always recommend that you contact your accountant at least one month in advance and book a meeting. This saves you from the unnecessary headache and stress involved in waiting until the last minute.
8. Not getting help of CPA:
Yes, you can file your own returns, however, we recommend that you seek CPA advice periodically. A good CPA can help your business beyond tax season while establishing healthy accounting practices among you and your team. To find a trustworthy CPA, we recommend focusing on word of mouth and referrels to ensure that you find someone that works in your best interest.
While the points listed above may fall under common knowledge, it’s normal that we forget the basics. To ensure the maximum efficiency when it comes to your company financials, reach out to one of our MCDA CCG experts-headquartered in Placentia, Orange County, California- and we can perform a comprehensive assessment. From there, we can customize strategic solutions to bridge any identified gaps lying in your financial operations.
Whether you need to find a suitable accounting software, help to manage your books on an monthly basis, create/edit your budget, or ongoing CPA support, our financial consultants can put your business in a position of overall strength. Reach out to one of our professionals today by phone, email, or even through our social media platforms.
We look forward to hearing from you!