Does Your System Talk to You?
If your answer is “YES” or “NO” then you are correct. Let’s re-word the question differently to “Do you have an effective Accounting or Bookkeeping System?” While some people might have the same answer, the more I converse with many successful business owners, the answer is not as straight forward. There always seem to be a “BUT” after the “YES” or “NO”. My next likely question that follows is “Does your system provide you the feedback about your business?” More than often the answer reverts back to the straight “NO”. Before proceeding, let me caveat this by pointing out that I am not talking about an accounting or bookkeeping software.
While bookkeeping may sound overwhelming to many business owners especially those starting off, having a clear plan with appropriate guidance will greatly ease up your outlook. The case is even more true today that having a realistic guidance paths your way to success in your personal and business financial outlook.
Gauge the effectiveness of your system
A good system is necessary for many purposes and especially for tracking the information that you must include on tax forms. You are probably familiar with the quote ‘Numbers don’t lie” and whether you agree or not, there are many truths to that. An effective Accounting or Bookkeeping system should assist you gauge whether your business model is effective plus also help you identify successes or failures.
For the system to work effectively, it is important for it to provide useful information organized in a way that can be easily understood first by you and then to other users. Your system should at least answer some basics like:
- Accuracy – the better the information, the more effectively you can respond. For example, the process of entering expenses might involve reviewing purchase receipts as well as bank and credit card statements.
- Clarity and Usability – can you find what you need when you need it and how easily do you understand how the information it tracks reflects your daily business activities.
- Relevance – is the system useful to you and does the information correspond to the fields on the tax forms that you need to submit to local, state and/or federal agencies.
- Adaptability – your business is a living, breathing entity, one that should continually adapt to change whether positive or negative. Your system should not only accommodate these ongoing changes by enabling you to add, delete or substitute categories but also be flexible in a way that you do not have to start all over. For example, if you run a service business and decide to supplement your income by adding a retail section, your accounting system should enable you to add fields that reflect your new business activities.
At 7M, we provide that one on one guidance towards a process that is less overwhelming but still addresses the important basics. We also act as a leverage to the accounting or bookkeeping “nightmare” as many of my acquaintances put it freeing you to focus on what you’re good at, running your business.
Contact us at 405.202.3723 or email ben@7mbusinesssolutions.com