Maintaining your business like you maintain your car
What does your business' accounting have to do with your car's maintenance? A lot.
Most people take their car for regular oil changes and tune-ups to keep it running smoothly and prevent a costly repair. On the other hand, many small business owners treat their bookkeeping like a major car repair, they wait for a problem (such as a tax deadline) to occur and then they reach out to a professional to fix it.
That is not the best approach to treat your business' books. Sure, your accountant is a skilled professional and well qualified to repair your books from months or years of neglect but they can help you better if you approach your business accounting like an oil change. Do it often, with a series of smaller and less expensive sessions. Monthly is a good frequency for many small businesses but some very new or very small businesses can get away with a quarterly bookkeeping update.
There are several benefits to this approach:
* It's cheaper- when you use a bookkeeper, you are not stuck paying your tax preparer/CPA up to 3 times the rate that a bookkeeper charges to clean up the mess
* It's fast- regular bookkeeping keeps your finances running smoothly, your bookkeeper can clean up small issues as they come up instead of letting them accumulate.
* It's informative- just like an oil change inspection can let you know if something in your car needs attention, like a brake replacement. Up to date books give you a current snapshot of the financial health of your company so you can make informed decisions about investment, clients that are past due, expenses that could be trimmed, and any other adjustments needed to the cash flow.
* Easy tax filing- your tax preparer can quickly complete your return (or do it faster yourself) when everything has already been allocated and organized throughout the year.
This all adds up to less stress, less hassle, and less cost, especially when you factor in extra deductions that your tax preparer can find for you when your books are clean and up to date.