Another tax season came and went but boy, did it send entrepreneurs everywhere scrambling! Like many, you probably blocked out hours upon hours to get caught up on 12 months of bookkeeping. It took you tons of hours to tax prep because you had to piece things together, find missing receipts and invoices, and strain to remember why you bought certain items so you could expense them correctly.
Bookkeeping may be your most important task because it drives decision making for everything you do. It gives you data and intel to know if marketing and visibility is working, how much more money you can put into it, where you’re at with your sales, if servicing your clients is profitable, and leadership-wise, if you can responsibly scale and build your team. When your bookkeeping is done on a regular basis, it allows you to utilize it as a tool to make smart, strategic decisions in your business. Even so, many entrepreneurs put bookkeeping on the backburner. That leads to them making important financial decisions not based on numbers but on assumptions, which inevitably transforms them into a financial train wreck. If you fail to systemize your bookkeeping, it can quickly become a giant monster in the closet that never goes away.
To keep your business running strong, it’s vital to keep your finances in order. To get started, create a simple system that divvies up your bookkeeping throughout the year. Breaking it up into manageable parts will make bookkeeping way less painful and tax season a breeze.
Use My Ultimate System To Whip Your Bottom Line Into Shape below as a template of customizable steps to start creating your own unique bookkeeping system. But first...
Guidelines For Successful Results
- Following the Profit 1st methodology in which bills are paid on the 1st and 15th each month, I schedule two blocks of time each month to do my bookkeeping – 90 minutes on the 10th and 60 minutes on the 25th. If the 10th or 25th falls on a weekend, I move the time block to the Friday before or Monday after. Once they’re scheduled, I hold those time blocks sacred. Then, I just run through my checklist during each of those time blocks.
- If you're not already using intuitive accounting software like Quickbooks online that can link to your accounts and download transactions, you need to be. Doing data entry from scratch is a costly waste of time. Take advantage of today’s technology that can greatly increase the speed by which you accomplish repetitive tasks.
My Ultimate System To Whip Your Bottom Line Into Shape
Each bookkeeping meeting with myself...
- I update my Budget Allocation Spreadsheet based on how much money I brought in minus expenses,
- Relying on those numbers to tell me how much money to transfer into my four Profit 1st accounts, I make the four transfers.
- My assistant PDFs all the receipts I’d saved to my Profit 1st email folder and saves them to the Expenses file on my computer.
- I review the To Be Paid folder in my email account where I’d been saving every invoice that came in via email and pay those invoices.
- *I fully pay off all my credit cards (I utilize them just for points).
- I run payroll.
- I pay any outstanding taxes due because of payroll.
- I print and save all credit card and bank statements.
- I balance my accounts, matching deposits and expenses to the correct categories (The longer you use intuitive accounting software, the more it auto-inputs the correct accounts. So, all you have to do then, is say Yes, Yes, Yes down the list with very few modifications needed).
- *I review my accounts for errors and reconcile them.
- *I audit my previous month’s P&L by clicking on each line to view its details and make sure everything is accounted for and in the correct account.
- *I analyze my Year-To-Date P&L in order to make strategic business decisions.
*I complete these activities only once a month on the 10th.
Like I mentioned, working through my entire checklist takes me only 60 minutes on the 25th and 90 minutes on the 10th. Depending on the nature and scope of your business, your unique system might take you a bit longer or far shorter. The more you do it, though, the more efficient you’ll become at working through the steps.
I’ve never enjoyed bookkeeping but I created my system because I know how important it is to have one. It’s a damn good system, too! It’s served me well and kept my bottom line in tip-top shape. Such great shape in fact, that I couldn’t wait to do my taxes this year because I knew I had the money and would even be getting back some.
I’ve also used my system to help clients get caught up on five years worth of bookkeeping! Before working with me to get their finances in order, a few of my clients had been unable to focus on other huge projects because the colossal task of bookkeeping was hanging over their heads, holding them hostage. They had to get out of that hole before taking on more and my system helped them do it.
Now, if this tax season was stressful and took you away from fun, family, friends, and working on your business, isn’t it time you tried something different? Tax season stress derives from not knowing how much you’ll owe and not knowing if you’ll have the money. My system for whipping your bottom line into shape totally eliminates that stress because it helps you proactively and strategically save for your tax payment month by month, Then, come tax time, you don’t have to play catch-up and can continue being present and effective in your business. Being stressed out and multiple figures in debt to the IRS is no way to live or grow a business. Use my system as a basis for responsible bookkeeping and you’ll be able to go into next tax season saying I got this!