5 ways that being misinformed can lead to poor choices
Come with me a little trip where I want to clear up a few common misconceptions about business finances and bookkeeping and how it may affect you and your business.
As much as I would like to think otherwise, I am under no illusion that for most business people, doing bookkeeping is on a par with clearing up after a party.
Taking the actual doing of it out of the equation; I have found that much of the resistance comes from why you need to do it rather than just what you need to do.
Remember. Numbers tell a story. That is why a bookkeeper or accountant can look at your figures for the first time and see things about your business that you may have missed or thought only you knew about. And if we can do it, the tax man definitely can.
Misconception 1 – My business is too small
When your business is small or you are a sole trader, the balance of the bank account and what is in your head can become the bench marks by which you measure how well things are going.
This is perfectly understandable when you are a start-up as there may be very little activity. Nevertheless the sooner you find a way to accurately keep track of what is going on with your money the more likely you are to stay out of trouble.
And your business simply cannot grow and survive if you don’t.
Misconception 2 – Bookkeeping is not as important as Year End Accounts
If you think of your financial framework in terms of the human body:
- You are the heart
- Sales is the lifeblood pumping around keeping everything going
- Accounting is your annual check to see how healthy you are overall
- Bookkeeping is the brain taking note of all the activity on an ongoing basis looking for signs of trouble and the reasons for good health.
How many lives have been saved because of early diagnosis, your business is no different.
Misconception 3 – I can do it myself
And you know what, that may well be true.
Ignoring costs for the moment, why are you?
Is your business doing so well you have spare time to devote to recording historical transactions?
If not how is this going to bring in sales?
And if your business is doing really well, I bet it didn’t happen because you did bookkeeping.
Successful entrepreneurs are totally on top of their financial figures, but that does not mean they have any idea how those figures came about. They just want the data to run their business the best way they can.
And not forgetting the time it takes if you are not qualified or experienced. I recently heard a photographer say “there may be camera on your smartphone, but it doesn’t mean you really know how best to use it” or something along those lines. But you get my drift.
Misconception 4 – Accountants are qualified Bookkeepers are not
While qualifications are a standard to measure the expertise of a financial professional, it is not the only benchmark. It is presumed that to be called an accountant you must have a qualification.
Did you know that at present anyone can call themselves an accountant in this country whether they have qualifications or not. There is no obligation to be part of any professional body or take any exams if you choose not to.
However; of course most choose to do so. Bookkeepers who qualify with the Institute of Certified Bookkeepers for example face a number of courses and examinations before they qualify at various levels and are prohibited from offering a service to clients that they have not successfully passed the exam for.
Many bookkeeping professionals are certified to offer Tax Returns and Final accounts as well as the standard bookkeeping and payroll services:
And there is no substitution for someone with a wealth of real life and varied experience; they are worth their weight in gold to your business.
Misconception 5 – I need ongoing advice and support but bookkeepers only enter data
Using myself as an example:
When it comes to entering data, I am certainly not shabby when it comes to speed and accuracy. I have people in my team who are qualified accountants who still go “how did you do that?”
But ironically, the entering of data has become a means to an end because my relationships with my clients have become more about hand holding and being a means of support than I ever imagined.
The entering of data is just the tool we use to do it.
What the person really wants is:
- to understand the story that the data is telling about their business
- know what to do or who to talk to based on that story
- know they are not alone in dealing with that side of things
I accept there are people in the business who are focused on transactions as opposed to what you need at the other end, but that is where how good you are at finding the right supplier takes on a whole new significance.
I will save that for another time.
If you have any questions or comments feel free to share them with us.