The Bookkeeping Bonanza: A Comedy of Errors (and How to Avoid Them). Plus The 10 Commandments of Small Business Bookkeeping

Alright, buckle up, folks! We’re about to embark on a wild ride through the thrilling world of small business bookkeeping. Grab your calculators and hold onto your receipts, because things are about to get numerically hilarious!

Welcome to “Accounting 101: Where Dreams Meet Decimals.” Today, we’ll explore the do’s and don’ts of keeping your business books in order, or as I like to call it, “Fifty Shades of Grey Areas in Taxation.”

The DO’s: Your Financial Fairy Godmother’s Wishes

Hire a Bookkeeper (Because Math is Hard)

Let’s face it, unless you’re Rain Man, numbers probably aren’t your forte. Hiring a bookkeeper from day one is like getting a financial fairy godmother. Sure, it might cost you a pretty penny, but it’s cheaper than paying for a “clean up” later. Trust me, I make most of my income turning financial dumpster fires into neat spreadsheets.

Keep It Simple, Stupid (KISS)

When it comes to categorizing your expenses, broader is better. Don’t go crazy creating categories like “Coffee for Monday Meetings” and “Coffee for Tuesday Meetings.” Nobody needs that level of caffeinated detail.

Reconcile or Die Trying

Reconciling your accounts is like flossing – nobody wants to do it, but it’s essential if you don’t want everything to fall apart. Do it monthly, or face the wrath of the IRS.

The DON’T’s: A Comedy of Financial Errors

Don’t Trust the Machines

Just because your QuickBooks claims it can do your books for you doesn’t mean it actually can. It’s like trusting a toddler with scissors – sure, they might do the job, but at what cost?

Avoid ‘Auto Add’ Like the Plague

‘Auto add’ rules are the equivalent of financial Russian roulette. You might get lucky a few times, but eventually, you’ll blow a hole in your books.

Don’t Play ‘Match’ Maker

Clicking ‘add’ and ‘match’ without verifying is like swiping right on every Tinder profile. Sure, it’s quick, but you might end up with some questionable matches.

The Golden Rules of Business Finance (Or How to Avoid Fiscal Facepalms)

Keep Your Money Like Your Underwear – Separate

Never mix your personal and business funds. It’s like wearing your lucky underwear to a business meeting – inappropriate and potentially disastrous.

Embrace the IRS (No, Really)

Believe it or not, the IRS website is a goldmine of information. Publications 334, 583, and 535 are like the Holy Trinity of small business tax guides. Read them, love them, live them.

Hire Professionals (Because YouTube Tutorials Can Only Take You So Far)

A good CPA or attorney is worth their weight in gold. And let’s face it, some of them are pretty hefty, so that’s a lot of gold.

The Bookkeeping Blues: A Tragic Comedy

Here’s a shocking revelation: most small business owners don’t know how to do proper bookkeeping. I know, I know, try to contain your surprise. Whether it’s lack of interest or ability is irrelevant – it just doesn’t get done.

Bad bookkeeping is like bad plumbing – it might seem fine at first, but eventually, everything’s going to hit the fan. And trust me, it’s much more expensive to clean up that mess than to do it right the first time.

The Financial Statement Follies

We offer to review financial statements with our clients monthly. Shockingly, most aren’t interested. It’s like offering free cake and having people say, “Nah, I’m good.” Who turns down free cake? Or financial insights?

Recently, I had a client insist he couldn’t have made as much money as his statements showed. After walking him through the reconciliation process and cash flow statement, he realized the numbers were correct. I then offered to review his statements monthly. His response? “Thanks, but no thanks.” Some people just love living on the edge, I guess.

Budgeting: Because Money Doesn’t Grow on Trees (Unfortunately)

Create a monthly budget and review your financials every month. It’s like a financial soap opera – full of surprises, plot twists, and occasional villains (looking at you, unexpected expenses). Your initial budget might be as accurate as a weather forecast, but over time, you’ll gain a better understanding of where your money’s going. It’s like developing a superpower, but instead of flying, you’re just really good at tracking expenses.

The Ten Commandments of Small Business Bookkeeping

1. Thou shalt set up a separate business bank account. Your personal account doesn’t want to mingle with your business funds – they’re from different social circles.
2. Thou shalt learn thy chart of accounts. It’s like learning a new language, but instead of impressing people at parties, you’ll impress your accountant.
3. Thou shalt reconcile monthly. It’s like flossing, but for your bank accounts.
4. Thou shalt review thy financial statements. They’re like tea leaves, but for predicting your business’s future.
5. Thou shalt check thy vendor transactions. It’s amazing how many errors can be caught this way. It’s like playing detective, but with spreadsheets instead of magnifying glasses.
6. Thou shalt learn thy software. Not all bookkeeping software is created equal. Some are like loyal dogs, others are more like cats – temperamental and likely to scratch you.
7. Thou shalt have a budget. At minimum, know what your monthly expenses are. It’s like knowing how much food you need to survive, but for your business.
8. Thou shalt set up products and services accurately for sales tax. Because nothing says “fun times” like a sales tax audit.
9. Thou shalt make estimated tax payments as needed. The IRS doesn’t like surprises, unless they involve more money for them.
10. Thou shalt know when to ask for help. It’s easier to set up correctly than to fix later. Think of it as the “measure twice, cut once” of the financial world.

In conclusion, bookkeeping might not be the most exciting part of running a business, but it’s certainly one of the most important. It’s like eating your vegetables – not always fun, but necessary for a healthy business. So embrace your inner accountant, hire help when needed, and may your books always balance. And remember, in the world of small business finance, it’s better to be boring and profitable than exciting and bankrupt!