Thread by @baldridgecpa

One of the biggest pitfalls I see with new SMB and Solopreneur clients is bad bookkeeping.

Bad books show up in many way, but ultimately carry the same nasty effect:

They screw up your business.

More on the root cause and potential solutions in a THREAD on bookkeping!

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Sometimes bad bookkeeping is done at the hand of so called professional bookkeepers. Most often, though, it is the business owners themselves or their admin staff.

With more tools available for you to DIY bookkeep than ever before, the options to screw up your books are endless.

Most follow 1 of 2 scenarios:

1. They are done wrong, and the numbers on the books are inaccurate. This makes them unable to be relied upon.

2. They are very far behind and not processed timely.. Oftentimes caught up just to prepare taxes 18 months later.

This means the business owner is frustrated, doesn't know how to read their financials, and derives no real value from 95% of the work being done.

Also if the books are never fixed in scenario #1, your taxes are misreported and you are paying (or not paying) the wrong amount.

These tools out there are not terribly simple to use. They require judgement calls and know how during their setup (setup you say?) and daily use.

The wrong process carried out over time can create a wide gap between what your books say reality is, and what reality actually is.

A few of the biggest issues I see perpetually with books:

a. Too many cards and accounts with no structure - The best thing you can do for your financials is to create boundaries between your biz and personal life.

Do not make personal expenses out of your biz or vice versa.

b. Huge Chart of Accounts - Your # accounts should be appropriate for the size of your business, and most business owners want way too many accounts that just make their financials messy.

Very few business owners can maintain an accounting system with hundreds of sub accounts.

c. Old records that are never cleaned up - Go into your bookkeeping software and print out a balance sheet and profit and loss statement right now.

Go account by account and make sure you understand what every number means in every account.

If not drill down and learn!

So how do you keep your books like a pro, and not get yourself in a hot mess?

Of course I'd recommend hiring a pro. And for many, many reasons.

Just a few:

1. Save you time - bookkeeping is a job to be done. At best you will do an adequate job and it will take 10x the time.

2. A pro can do a better job - There are 'tricks of the trade' with every software, and knowhow that comes along with working in a piece of software every day.

3. Accountability and timeliness - A good pro can deliver complete and accurate financials on a specific cadence.

4. Useful Metrics - when accurate financials are delivered timely, you can start to use them as an ongoing reference point. You can track period changes and start to understand the health of your business vs your books.

You can stop using your bank account as your barometer.

I have noticed my clients have been consistently frustrated with trying to to do their own bookkeeping, or working with the solutions in the market.

SMB process guru @joshuamschultz and I are teaming up to offer a tech enabled bookkeeping platform and are looking for beta users!

We are trying to do it better by providing a great user experience. Beyond that we have ideas on built in effective metrics as well as tax savings opportunities.

If you'd like to be a beta candidate or follow along, please fill out the form below:

forms.gle/kAvvHDUQeh36fk…

If you enjoy the thread give it a like and retweet. If you have any questions for me or Josh stick them below 👇🏻