My wife and I own a 2000 Mazda 626 with 243,000 miles on it. We take pride in this car because we don’t have car payments and it gets us from point A to point B just fine.
When things inevitably go wrong with the car, it’s not all that frustrating, but just understood that it comes with the territory of owning an older car.
But eventually, a time will come (possibly quite soon) where it becomes glaringly obvious that the cost of keeping the old Mazda running will outweigh the cost of splurging for something newer.
If it got to the point where it was a drain financially, or even emotionally or with time because it always needed repaired, I would have to take a look at the results of owning this old car – and determine that it’s time for an upgrade.
I feel like this is how many entrepreneurs handle their bookkeeping. It’s like an old car that is clearly ready for an upgrade, but you keep patching it together, hoping to make it through another year.
I get the mentality. It’s just like the car. But I’m here to tell you, if that’s you – it’s time to upgrade your bookkeeping.
Bookkeeping is a sneaky thing in a business. If you don’t pay much attention to it, you can trick yourself into believing it doesn’t really matter. You can get by and put it off, or have your spouse do it, or do it yourself, and then take the shoebox and spreadsheets, and un-balanced books to your CPA to sort through.
Sure it’s a bit painful, I wasted some time, but I saved money by not investing much into it!
It’s like saying, “sure the AC doesn’t work and I spent $2,500 in repairs – but I don’t have a car payment!”
Putting off and ignoring the bookkeeping in your business is costing you in big ways, and you’ll be blown away by the feeling of a brand-new, working bookkeeping system. Let me explain.
Six Reasons You Need to Upgrade Your Bookkeeping ASAP
1. You are getting no tax benefits
There are tax benefits to being an entrepreneur. But to take advantage of them, you need to be advised on the rules, and you need to properly track your transactions!
If you are lax on the tracking, you’ll miss opportunities and your CPA won’t be able to provide meaningful advice because they’ll have poor data to work with.
2. You are wasting a ton of time with data entry/collecting information
Even when you put off bookkeeping, you end up wasting more time that you’d expect. You are still trying to enter data when you can. You are finding receipts and having to track invoices.
And then when you get to tax season, you spend hours trying to sort through everything you have – and go back and forth with your CPA to make sure they can file taxes.
You know how important time is, why are you wasting it here?
3. You have an Underlying Question, “Am I doing this right?”
When you aren’t working with a professional to track financials, you’ll always have this weird anxiety in the back of your mind that something could be wrong. That you could miss something.
I hate to be vulgar, but the A-word (audit) is a real word. What if the IRS chooses to audit you?
In a more practical sense, what is happening to your invoices? Are you certain they are all being paid?
4. Dealing with Banks!
If your business requires regular interaction with banks, you’re really going to regret avoiding bookkeeping. An example of this is an entrepreneur or real estate investor who is consistently producing financial reports to close deals and finance properties.
With good bookkeeping, the financial reports are no problem. Without it, you will go back and forth with your bank, trying to ensure they have what they need. This will delay the process and can even hurt your chances of getting financing.
5. Forecasting/Understanding Profitability
Do you know how profitable you are in a given month? Which expenses are making the biggest impact on profitability? What ROI you are getting from your spending?
What impact would hiring a salesperson have on your bottom line?
How can you answer these questions without good real-time financial information?
Why is this section all questions?
Probably because when you put off or ignore bookkeeping, you have more questions than answers. You don’t know where your business stands.
If your financial reporting is only looking backwards, it is too late to make any meaningful changes. Forecasting and projections provide insight into your future, which is where you should be focused.
6. Your CPA is Going to Charge You to Clean It Up
When you don’t prioritize bookkeeping, you are going to take a mess to your CPA at tax time. This is bad for multiple reasons.
First, it’s going to be painful and costly for them to get it organized. You’ll have to answer a lot of questions and you’ll have to pay for their time.
Second, because the CPA is spending so much time entering transactions, you won’t be able to get any meaningful advice from them.
So now you are paying a premium, but not getting a premium service.
Time for an Upgrade
Any one of these items would be enough to warrant upgrading your bookkeeping. When you look at these six reasons altogether, you can now see that your bookkeeping is in way worse shape than the old car.
You may not have a monthly payment, but you are paying a lot more in other ways.
Let’s Talk About Upgrading
At Kahuna Accounting, we set you up with a shiny new bookkeeping system, with balanced books, proactive reporting and a talented team that has your back.
Fill out this form and you can schedule an appointment to determine if our service might be a good fit for your business.