It is part of the American dream for many to find the right idea to start a business and if you watch ads on TV from Quickbooks, it is incredibly easy to make it all work. It’s great to wish that things like accounting can be so simple that it only takes a few clicks of a mouse to do something as complicated as managing the books for a company.
It is fun and inspiring to dream of ways to create a new product or service yet the dream can become a nightmare when you realize there are details that are far more complicated than you thought. You find out your books are wrong, your financials don’t match up and your bank needs the updated information often at the worst possible time. It doesn’t have to be this way.
Heutmaker Business Advisors has worked closely with countless small businesses, and their experienced team of accounting professionals would love to help relieve some of the start up stress from other entrepreneurs. From ensuring that a business has proper systems and processes in place when using their chosen accounting software to managing a business’s full accounting records and everything in between, Heutmaker works closely with their clients to customize a business plan that fits the wants and needs of each individual business.
In the United States alone there are almost 28 million small businesses and over 50% of the working population is employed by a small business. These small business range from tech start ups, to restaurants, to engineering firms and many more. One thing that all of these 28 million companies have in common is that they have to be in the business of “being” in business. Many of these businesses do not have room in their budgets for a full-time accountant, and that is typically one of the reasons they choose to use accounting software.
The most complex challenge for many businesses is often not being able to connect with customers. It’s being able to keep accurate accounting records, proper monthly closings, internal financial reviews, reconciliations, budgeting and hundreds of other accounting tasks.
Systems like Quickbook are easy to learn, and can be simple to use. The idea behind this software is that it makes running a small business convenient, cost efficient and easy. It can tell you how much you made, what it cost to sell your product, who owes you money, who you owe money to – in cool looking reports and graphs. What the commercials don’t tell you is what it takes to make this work – your time, your commitment, and a dedicated program to make sure the bookkeeping ball doesn’t drop.
If these systems are properly maintained on a daily, monthly, quarterly, and yearly basis they work wonderful, but this is often takes much more time and effort than business owners initially expected. More often than not the stress, daily tasks, and abundance of meetings associated with running a small business gets put ahead of keeping these databases properly updated. Factors such as carelessness, misinterpretation of data, and lack of information all contribute to these software systems being more of a costly inconvenience and lead to larger problems.
When keeping your records up to day becomes an after thought the software can often times hurt a business, rather than help. Inaccurate accounting records can be costly for small businesses, both in terms of money and reputation of a business. The consequences associated with faulty accounting can include bad decision-making, decline in profits, loss of potential and current business/clients and various other unfortunate outcomes.
We have worked closely with businesses of all sizes who struggle with this challenge. They have the best intentions to keep up but run out of time and only realize the problem when it comes time to get a loan, sell the business or deal with another major event. Like a bad cold, the longer a company waits to really look at this, the worse it can get making what was a small issue a major challenge for a business owner.
The good news is this is really all about accounting. It just takes time and a commitment to make the financial foundation of your business is in good shape. There are usually ways to both fix a challenge and to check to see if there are some warning signs to look for within your own business.
Here are a few questions accountants ask themselves when reviewing businesses accounting records, that we think will be helpful to the owners and operators of small businesses when reviewing their own accounting records.
Questions for Small Business Owners
Would I feel comfortable being audited?
Are all accounting documents (balance sheet, income statement, cash-flow statement) updated on a monthly basis?
Are all receipts accounted for?
Are financial decisions focusing not only on the short-term but also on the long-term?
Have personal and business expenses been mixed?
These and other questions are important to not ignore. It can be a way to identify a problem as early as possible or to make sure your team is getting the job done. Our team would be happy to answer any questions you have because like many of you – we are also a small business that have to deal with the same challenges.