Small Business Getting a Handle on Financial Statements
We recently received a question from a contractor. Here is the question and what our suggestion was for him:
Q: I’m a small business (just me and another tech) and I don’t have anyone in the office to keep my books. I know I should have a better handle on how my business is doing financially, but I can’t afford to hire someone. Right now, I gauge my business success on how much money I have in the bank. Any ideas?
A: You are not alone. Many contractors have the same problem that you do. Your financial statements are a very important tool that allows you to see the following:
- How much revenue you are bringing in;
- Where you spend your money;
- How much profit you make;
- Who owes you money;
- How much you owe suppliers;
- How much cash you have;
- The amount of debt you have (loans, notes, etc)
Financial statements can identify challenges that you have in your business as well as assist you with knowing when and how to grow your business. It is one tool that you cannot afford to go without.
So here is my suggestion: Go to your Yellow Pages, or online, and look under bookkeeping service. Find someone who you can outsource your bookkeeping to. Most small businesses use QuickBooks-certified. Make sure and ask for references and let the company know that you need to get timely information. It will need to be able to do the following: record customer invoices and deposits made into your bank account, enter and reconcile accounts payable, reconcile your bank statement each month, and assist you with quarterly tax payments. If they will also take care of your payroll, I highly encourage you to let them process payroll for you as well. If they do not process payroll, look for a service such as ADP or Paychex to do it for you. Payroll is one of the most error-prone accounting processes for small businesses. And it can cost you thousands in penalties if you don’t process it right!