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Most entrepreneurs start their own business for the love of what they do, sell or provide; like running a bookstore, making custom boats or creating beautiful websites. But, do you know how much it costs you to run that business or make that boat? Do you know which tasks are producing the most income and which ones are draining the business?
Seldom will you go into business with a love for bookkeeping and knowing what a bookkeeping education could mean for your business unless that business is being a bookkeeper! That being said, there are a number of ways taking a bookkeeping course can be of benefit to you as an entrepreneur in both how you see your business and how that information can support business growth.
You don’t need to take a full-scale bookkeeping course and earn a bookkeeping certification to gain the benefits from bookkeeping tools and techniques. In an entrepreneur’s world, enrolling in something more flexible, like a specific bookkeeping course online may be the right fit.
Chances are you’re reading this and thinking you don’t need to take a course, whether it’s an online bookkeeping course or otherwise, because you already have a bookkeeper or an accountant who takes care of finances for you. However, the truth is that while that person has bookkeeping certification and knows the ins and outs of your books, they aren’t with you at all times to help you make informed decisions.
Unless you have a more detailed (and current) understanding of your business finances, it’s impossible to make financial-based decisions accurately. Your updates from the bookkeeper may not be as current as you need for all the actions you want to take. When you play an active role in your own bookkeeping, you have the information you need and help your bookkeeper with accurate financial details at the same time.
You should look for a course that teaches you the basics of financial accounting, including how to use a variety of bookkeeping tools and systems, taxation, navigating payroll and many other important elements of the bookkeeping world. With this education, you’ll have a better understanding of what is happening in your own business and will have updated records to make better decisions.
Consider the clients you’d like to have compared to the ones you currently have. Are your current clients providing you with good returns on your time and other inputs? You wouldn’t really know if you don’t have up-to-date financial records to look at. Not only would taking a bookkeeping course help you analyze your financial data, it would also give you insights into the activities that are making you money instead of costing you time.
By doing a quick review of your financials, you’ll soon know what your expenses are and from there can determine how much a certain product or service costs you to provide. Knowing the costs of your business is essential to pricing, it’s also essential to timing. If you analyze the different offerings you have, you’ll see which ones take the most time and which ones the least. What is the return on those items? Chances are, you’ll find something indicative of the 80/20 rule where 20% of your tasks aren’t providing you with the return you want or 20% of your clients don’t pay you enough for your time.
Decisions, like cutting a product or service offering or eliminating less profitable clients in favour of seeking out higher-paying ones, isn’t easy. It can be gut-wrenching when you enjoy the work. That’s why a bookkeeping course is so important – you’ll understand the numbers. Numbers remove the emotion from the situation and the next time you sit down to work on a project for a less-profitable client, you’ll know they aren’t helping your business grow. It may not happen overnight, but in time, simply knowing the financial truth will allow you to let go of that client, product line or range of services.
It is particularly painful when it’s time to get slips, forms and financials together at tax time. Letting it slide a month or two soon becomes six or eight months late and before you know it, you’re in arrears and getting some very unpleasant phone calls.
No one likes tax time. It adds another task into your already busy schedule, but if you keep your financials up to date (monthly at a minimum), you’ll be ready to hand everything over to the bookkeeper at tax time without the scramble and stress. There’s another benefit to keeping things current when it comes to taxes – better estimates of what you owe in the short term. While some small businesses submit their taxes annually, most do so quarterly. You want your business to grow, which means – oddly – you want to ultimately pay more taxes. If you make your payment based on last year’s numbers, you’ll end up owing if your business is growing and no one wants that. Instead, base your quarterly payments on the numbers that are current and accurate to avoid a big bill at tax time.
Unless you did earn that bookkeeping certification, it’s unlikely you’re going to know all the ins and outs of payroll, depreciation and regional taxation rules. Your bookkeeper and/or accountant can help in so many more ways than just “keeping the books” in that they can help you look at the bigger picture and understand the potential opportunities in your business. If you keep your books current, you make your bookkeeper’s job easier and ultimately have better access to the information to make better business decisions.
And yes, it will take some of your valuable time to stay on top of things. There may be a night when you’d rather binge-watch Game of Thrones than get your financials in order. It’s a slippery slope to put those updates off for too long. Not only will your information be old and unable to help you make business decisions like whether to lease another car or add a new product, you’ll also be left scrambling at tax time. It’s far easier to put in the 5% extra time now than spending an entire day trying to catch up later. Having knowledge of bookkeeping will only make your life easier.