Have you ever heard the saying “ignorance is bliss?”
Ignorance can be comforting to entrepreneurs, and sometimes, even necessary to clear our mind and focus on what we think most needs our attention. If there’s one area of business most small businesses and entrepreneurs are most likely to put to the side and try to pretend it’s in good shape when it’s actually a mess, it’s their finances.
Bookkeeping, accounting, taxes, financial documents…are you confident about or excited to focus on any of these aspects of your business? It’s much easier just to pretend they’re in good shape than take the time to properly handle them.
There are two ways you can approach the problem of needing to handle your own small business’ bookkeeping. The first is by addressing it head on and getting the financial side of your business on track. The second, which is easier and much more fun, is to just pretend that your bookkeeping is in place. In the case that you’re considering the latter, here’s how you can pretend:
Keep every receipt and shove it in a file cabinet or shoe box
We’ve all been told to hold onto our receipts. Having them, even unorganized in a closet or shoebox with business expenses mixed with personal, is like having a nice little warm blanket. The problem with little blankets is that they can’t cover your feet and your body at the same time. It’s like having a band aid with a broken arm.
But, the fact that you have all of your receipts, and possibly even in one single place, allows you to say that you have everything in place and a “system” for tracking and recording transactions.
Buy accounting software or an online subscription
“Of course I have a system in place, I bought XYZBooks for my computer!” Purchasing Quickbooks, a Xero subscription or signing up for Freshbooks invoicing software truly makes it feel like you’re doing something. And in reality, you’re taking a step in the right direction.
To make sure you’re only pretending and not taking the time to manage the accounting side of your business, don’t read any booklets, tutorials, or go through and connect your bank and online accounts to the software. Just assume that you’ll pick it up later.
Know one of your bookkeeping related metrics – revenue
Pretending depends on having just enough information to pull it off. To make sure you’re not questioned further about your business’ books, make sure to have enough in place to be able to recall a seemingly important statistic, like how much revenue your company brings in. Sure, you might be losing money if you have a negative profit margin, but having a six or seven-figure revenue number to share sounds impressive.
Have a CPA
Like having bookkeeping software, having a CPA or firm do your taxes once a year and provide you with a list of things you need to get in order is comforting. After all, who’s going to question your bookkeeping preparedness when you can say something fancy like “I’m going to run this by my CPA?”
Make sure your CPA is strictly for appearance and not handling your everyday transactions. Pretending is not about getting things done, it’s just making it look that way!
Get Someone Else to Handle It, But Not a Bookkeeper
The best way to pretend is to get someone else to take responsibility. Administrative assistants or a spouse will work perfectly when you need to explain that you have a bookkeeper, and it’s your wife. But, make sure you don’t oversee what they are doing and don’t get them any training or assistance when turning over this responsibility.
Want to stop pretending? Kahuna Accounting is the perfect solution for small businesses that are serious about growth. Kahuna will help a financial system in place that will help them look forward instead of backward, and make tax time a breeze. Contact us today to learn more.