3 ways to tell it’s time to Hire a Bookkeeper

 

I love bookkeeping. I have clients who came to me the first year of their business. I also have clients who came to me after being in business for several years. Starting record-keeping in the first year is usually much simpler for accountants . A lot of the time, business owners attempt to take care of the financial records themselves. Many business owners are savvy enough to do this and in return it saves money. However, sometimes we overlook the time it takes away from growing our business. I have  3 ways to tell it’s time to hire a bookkeeper.

1.) You can only get to doing your books every couple of months.

Financial records should be kept on a daily basis. It can vary depending on the size of the business. However, at minimum record keeping should occur monthly. If you find yourself not keeping up with your books on a monthly basis, it may be time to hire a bookkeeper.

2.) When you are more focused on your books than your sales

Again, of course many business owners are savvy enough to do their books themselves. As a CEO, we all know there are other things that need our attention that only we can do or maintain.If we are not focused on making the money we will not have any records to keep anyway! If bookkeeping take away from generating your cash flow, it may be time to hire a bookkeeper.

3.) You are stressed out during tax season

We are in tax season. After your books are closed you take your financial records to your tax accountant to file your taxes. The thing is, we are usual not prepared for our taxes. So we have to pay for tax preparation which includes 12 months of bookkeeping that we should of already done! So if you are stress during tax season. because your books are not closed so your tax accountant can successfully file your taxes with your financial statements, it may be time to hire a bookkeeper.

 

3 Reasons to keep Good Financial Records

 

Do we underestimate the importance of good financial records? Or are we uniform of the importance of good financial records? Either way, bookkeeping is one of the most important things you have to do as a business owner. It is required by law  to upkeep financial records. It is to your benefit as a business owner that you keep great financial records. I know it can be time consuming. So if it is something that will take up a lot of your time, then a bookkeeper should be the first thing you invest your profits in.

There are several different reasons why bookkeeping can help your business, however I am only going to cover a few.

1.)  Good Financial Records help avoid over and under paying taxes

The IRS requires us to pay as we earn our income. You can do this by submitting quarterly estimated taxes. If you are not properly tracking your expenses, you  may overstate your profit. which will cause you to over pay in taxes. Many times we pay more taxes than we have to. If we can be diligent with our bookkeeping we can determine how much we owe to the IRS to the dollar.

2.) Good Financial Records make it easier to get a loan or sell your business

Banks and investors like to see good financial records. It makes it easier to make sound decisions. You financial statements tell a story about your business. They also give a snap shot of that story. The last thing an investor or banker want to do is go through unorganized paperwork to make a decision to partner with a business.

3.) Good Financial Records helps identify the strengths and weaknesses in your business

Business owners can make business decisions from their financial records. Your financial statements can show how profitable your business is. What is your most popular product or service. When is your most profitable time of the year. All these things are great information to run a business.

These are 3 great reasons to keep good financial records. There are many software’s that allow you to do this yourself. If you want someone to do it for you click on the link to schedule a 15 minute bookkeeping consult.

BOOKKEEPING CONSULT 

 

 

Good Financial records are fundamental to your business success

 

We have so much to manage when going into business for ourselves; the last thing we want to manage is our financials. However, financial records are a part of owning your own business. There are many things that go into making sure the financial records are accurate. I will not go over that right now. I do want to share why financial records are fundamental to your success.

Many of us start a business for freedom, for money or whatever your case may be. Sometimes it is just a simple business to earn a little cash on the side. It doesn’t matter how small the business, you should always treat your business like a business. Here’s why:

Financial records allow for you to use financial ratios to determine the profitability of the business.

Financial records allow investors to determine if your business is a good investment.

Financial records allow you to reduce your tax liability.

Financial records allow you to increase your profits

Financial records help lenders determine if your business is a good financial risk to take.

Financial records give you information on your highest paying customer or highest paid vendor.

Financial records are fundamental to your business success. If you do not maintain financial records your business will lack the direction it needs to become successful. You will always need to see the big picture as a business owner.

If you know you need to learn more about the components of financial statements and keeping accurate records join my free webinar.

I will discuss the not only how to understand financial records but how to use financial ratios.

 

 

The Most Popular way to do your own Books

When starting a business you are required to maintain a set of financial records. Even if you decide to use software like Quick Books, you will still benefit from knowing how to manually record you books.

Accounting professionals go to school to learn how to manually book keep. Nowadays we have software’s to help us with the process. Thank God! This saves a lot of time,effort and can reduce errors. Bookkeeping errors increase IRS audits. However, I understand everyone is not ready to learn a new software. So I provide a few keep points on how to do your books yourself. To assure you are in compliance with the IRS you can upkeep your Income Statement with excel. Below are a couple key points on how to do that assuming you have basic knowledge of excel.

The first thing you want to do is: Create your chart of accounts

These accounts are the income and expense accounts you will like to track. For example, sales or revenue is a chart of account. However, I’ll be a little more specific. As an Accountant my sales accounts are broken into several charts of accounts like consulting, bookkeeping, taxes, e-courses, e-books etc. Also create expense accounts like utilities, rent, advertising telephone, internet, supplies and materials, professional fees, licensing etc.

The next things you want to do is: Create an excel sheet 1

Label this your Cash receipt tab. Label sheet 2  Expenses and the 3rd sheet will be labeled Income statement.

After creating your tabs: Label your columns

Cash receipt tab should have a date, name , and chart of accounts (in my case would be bookkeeping, consulting etc.)  The amount of the transaction will be listed under the particular account name. Set up all accounts to total sum separately at the bottom of the columns and transfer to sheet 3.

The expense tab should have date, vendor name, and chart of account listed, such as rent, utilities, professional services. The amount of the transaction will be listed under the particular account name. Set up all accounts to total sum at the bottom of the columns.

After labeling your columns: On your third sheet you will need to list your income accounts

This time list them vertically. Each account TOTAL sum should be transferred from sheet 1. By using[ = (select cell on sheet 1)].

You will also list your expenses accounts beneath you income account vertically. Transferring each total over by using the formula above [ = (select cell on sheet 2)].

To wrap it up: On sheet 3 Total sum all your income accounts and Total sum all your expense accounts.

At the bottom take your income less your expenses and that will be your profit

I would suggest doing this on a monthly bases. Each month you will have your Income less your expenses and you can determine your profit. You can compare your income statement with previous months.

For your year end, just transfer all monthly financial records in a master sheet. This will give you an accumulated yearly  amount.

If you are a business owner and need to learn more about the accounting process and managing your books join my free webinar to learn the language of an accountant which will allow you to better manage your business.

 

 

 

3 Simple Ways to Manage Business Profitability

Being an entrepreneur is a dream to many. We all want to do something we are truly passionate about, be our own boss and live freely. Although many of us start a business for the freedom, we shouldn’t forget that business has to turn a profit if you are looking to make a living

A successful business depends on several factors but three main factors are marketing strategy, goods and services, and healthy customer relations. All of these factors are key components of profitability. Profitability is the management of the money coming into your business and coming out of your business.

You have to keep track of your company’s finances to measure the sustainability of your business. One of the main ways to do this with is financial ratios. There are many financial ratios that can help as profit tools. They help implement your business profitability, liquidity, and financial structure.

I am going to share 3 financial ratios below to help you manage the sustainability of your business.

1.) Net Worth

Net worth = Asset – liabilities

Your company’s’ net worth is the business assets minus the business liabilities.

This is what determines if a business is worth millions. The net worth equals a million dollars. If    you do not like the net worth of your business you will need to focus on increasing your assets           and reducing your liabilities. Create a daily, weekly, monthly, quarterly plan that will allow you to    meet your desired net worth.

2.) Working Capital

WC= Current Assets / Current liabilities

Your working capital is your current assets divided by your current liabilities. This is a little different than net worth. It takes only you current asset and liabilities. This is an indication whether or not a company has enough short term assets to cover its short term liabilities.

3.) Return of Equity

ROE = Net Income / Shareholders equity

This ratio determines the profitability of a business. It measures how well a company’s uses investments to generate earnings to grow the company.

These are just a few financial ratios that business owners can you use to see the financial health of a business.

I am honored to share my upcoming free webinar that will cover these ratios and much more. The ultimate goal of the webinar is to share how to wear the hat of a CFO. From understanding bookkeeping to understanding Financial ratios and Cash flow management.

Click the link to join if you are an entrepreneur who needs to better grasp business finance from the perspective of an entrepreneur.

Business Can Be Easy, Necessary, and Hard

I love building my own business. However, I have to admit, it is not the easiest thing to do.  When you are your own boss of course you have your own hours. Those hours can vary depending on the person. What I found myself doing is working late and getting up early. I am very determined and forget to take breaks. Am I the only one?

So, I just wanted to remind you to take a break. Make sure you put it in your schedule. At a 9-5 you at least get two 15 minutes breaks and at minimum a 30 minute lunch.  As entrepreneurs, we have to wear many hats until we make enough money to delegate roles or until we actually have the capacity to deal with help. Until that day, I suggest to take breaks. While we are creating financial success to build financial freedom the last thing we won’t to do is get exhausted.

I am experiencing that running your own business is easy, necessary, and hard.

It is easy to do what you love.

It is easy to do what you are good at.

It is necessary in order to live the life you aspire to live.

It is necessary to impact the lives you are destined to impact.

It is hard not to push yourself.

It is hard to balance it all.

I will continue to keep in mind why I do what I do but I will also keep in mind to rest from what I do. There is only one me. I hope you will do the same.

As a bonus for reading this, click the link below for 15 must know Business Essential for Entrepreneurs.

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10 Must do’s for a Successful Business Year

Happy New Year!!! Can you believe another year has passed. Time is flying us by and I want to make sure we are making the best use of our time for our businesses. So I have 10 Must do’s for a successful business Year. These are things I had to implement in order to see success. I want to share them with you as well. It is really easy to become distracted from our goals or our purpose. In order to see continual success we not only have to remain focus but implement the things below:

1. LET GO

Our personal life directly correlate with our business life. If we are not happy in life or in personal relationships, that can affect the success of our business. There are some things and people we need to let go of. We need to let go of relationships that are no longer beneficial.

2. NO CONDEMNATION

Life is hard enough. Please do not be so harsh on yourself for the pass things you have done or have not done.  Or the people or things you had to let go. Moving on is necessary for your growth. There will be things and people you will no longer be able to hold on to and it will be difficult. However,  being hard on yourself will not make it easier.

3. BELIEVE

Believing in things I had yet to accomplish took my business to another level. I was believing for many things. We make goals for our business but sometimes we forget to actually believe that we will hit the goals we set for ourselves. It is not enough to have a goal. You have to have a plan. During the plan with each step you need to believe that your end goal is possible and will come to pass.

4. LIVE

One thing I wasn’t doing was living. I was working, working and working. Live through the process. Live through the process of building your business. For me, I get so stuck in planning and building sometimes I forget to relax or have fun, even on business travel. When traveling for business I make sure I have a casual moment. A moment to relax.

5. LOVE

I have a huge desire to love. That is not normal for me. I came from a past of rejection. So I shielded myself from love. I had to deal with the rejection head on and now I have a desire to have healthy relationship. It is very important to have healthy business relationships as well.

6. GRATITUDE

Remember to always be grateful for where you are now. When you show gratitude to your current circumstances you can continue to move forward in new circumstances. Do not curse your progress.

7. SERVE

I know we are in business for a profit. We also have to remember we work for our clients or customers. So ultimately, we are serving the needs of our audience. Start to look at your business from a perspective of giving and serving. It makes the business a lot easier.

8. CREATE

We have to be innovative. We have to continue to create content, material and products that our customers or potential customers will benefit from. This year at minimum I plan on releasing something every quarter. I know people who release things every month.

9. PRODUCTIVITY

I believe productivity and creativity go hand and hand. To create, we have to make sure we are productive. Lets make sure we are not just busy but we are busy producing.

10. EXECUTION

Lastly, execute. We have to implement what we create. 2017 is the year of following through.

I hope this list is a reminder for you to implement or continue implementing focus in your business for the new year.

As a bonus for reading this, click the link below for 15 must know Business Essential for Entrepreneurs.

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