Bookkeeping isn’t fun or sexy. It may make the difference between hitting home runs and going broke though. Here are three myths that could be killing your business.
QuickBooks will Save the Day
Everyone has heard of QuickBooks. Since it continues to be a cost-effective solution for most businesses, I’ll likely keep recommending it. There’s only one problem. It’s only as good as the people who maintain it. Unfortunately, most users have been trained little, poorly, or not at all. That puts your most important financial information—cash flow, profitability, and operational effectiveness—in the hands of a mad scientist. That brings us to the second myth…
My Accountant is Keeping it Clean
The outside accountant will swoop in and come to your rescue! This doesn’t work either. The last several valuation engagements I worked on had some level of outside accounting assistance. All but one had basic accounting issues that required multiple adjustments. The one with no issues had a well-trained internal bookkeeper and a good outside CPA. This is a combination I’ve found works quite well. When there’s little internal knowledge [and/or] little outside help, things get sloppy and the bookkeeping falls behind. That brings us to our third myth…
Getting Behind is No Big Deal
Running the business and dealing with the day-to-day emergencies takes the wheel. “We’ll get to the accounting later.” “We only need that for the tax return.” “There’s money in the bank.” These are statements that make me cringe since you’ll be reacting instead of planning. Don’t believe me? This is where they usually lead:
-> Tax penalties and interest.
-> Income tax and no cash to pay it.
-> Below average or no profitability.
-> Inability to borrow or missed loan payments.
-> Blowing relationships with customers and suppliers.
-> Difficulty finding and keeping employees.
-> No chance to sell your business.
What Should You Do?
-> Get someone trained on your accounting system (inside and outside).
-> Have a backup for your primary bookkeeper. At least two people keep the wheels turning.
-> Trust but verify the outside accountant. Get a consult from a CPA (like me ????).
-> Stay on top of it. Close the books in days or real-time.
-> Use forward-looking accounting metrics. You can’t fix your business looking backwards.
Don’t let these bookkeeping myths kill your business. They will if you ignore them.
Can I Help You?
Hi, I’m Josh Horn, CPA/ABV, CVA of Horn Valuation. I help with business valuations in friendly or unfriendly situations. I also help owners build valuable companies. My clients are business owners and attorneys. If you’d like more information, check out my website hornvaluation.com, email me at [email protected], or call me at 217-649-8794.
I’m a licensed Certified Public Accountant (CPA) and double-credentialed in business valuation (CVA & ABV). I’ve been a tax and business consultant in a top 100 CPA firm and a controller in a large international company. I’ve also valued and been the primary advisor to multi-million dollar and small companies in various industries.
“If you’re not working on business value, who is?” Josh Horn, CPA, Certified Valuation Analyst and Accredited in Business Valuation