Ever feel like you just don’t feel like it? *thought to self… did that make any sense to anyone but me? * Anyway, back to the scheduled programming…
Lately, I’ve been on a goal setting kick…mostly because I’ve achieved a few and I like how that feels and I want to feel that again. Notice how many times I said “feel”…. quite a few. Feelings are quite addictive. (more…)
So it’s the last quarter of the calendar year. Have you met your goals? Have you exceeded them? Not even close? Do you even have any goals? I know, a lot of questions… but if you answer them honestly, you are well on the way to transforming your business in the next 90 days and finish strong.
So you started a business and as a solopreneur, you were many hats. One of those being the hat of the bookkeeper/accountant aka the keeper of the checkbook. What’s so bad about that…all you have to do it balance your checkbook, right? WRONG!
I’ve seen it time and time again. Entrepreneurs skipping the necessary step of hiring a bookkeeper or accountant (or accounting firm) to monitor their business finances in an effort to save money. What they don’t realize is what they save in the short term is probably costing them much more than in time, effort, and fixing mistakes in the long term (especially when its the tax preparer/CPA that is fixing those mistakes later).
Here are a few common bookkeeping & accounting errors that small business owners make when they go it alone:
Mistake No 1: Treating sales as revenue before the product or service is delivered. Why it’s a mistake: Not only is it contrary to “revenue recognition rules” (ask an accountant what that means or Google it) but..”Great sales in a month that will be delivered to the customer later…can give a company a false sense of profitability”
Mistake No. 2: Not considering the financial ramifications of a large purchase, such as equipment. Why this is a problem: Dipping into your cash reserves can have long-term consequences if you aren’t adequately covered to pay your day to day or month to month fixed expenses (or if something breaks – and something always breaks, right?) Consider taking out a short-term loan to pay for the large purchase over time or consider leasing the equipment.
Mistake No. 3: Confusing PROFITS for CASH FLOW. Why this is a problem: Business owners need to learn how to read all of their financial statements – instead of depending on one. Your Income Statement may contain several “non cash” items that my lead you to believe that you have more spending power than you really do. So it is important to read it in conjunction with your Balance Sheet and your Cash Flow Statement to get a truer picture of the financial health of your organization and evaluate what your spending power really is.
When you started your business, I’m sure you had no idea that you’d have so much to learn and so much to do. But don’t give up…just like you are good at what you do and have a passion for it, there are tons of professionals out there that are ready and able to exchange expertise with you so that you don’t have to go it alone.
Until next time… Live long and prosper. (ha…sorry, I was in a groove & that just seemed appropriate).
Don’t forget to post a comment and tell me what you think!
Related Links/Source:
Three Common Accounting Mistakes via Entrepreneur.com
If you’ve heard of Virtual Assistants and understand the concept, then Virtual Bookkeeping/Virtual Accounting is not too far from that. The main difference is the area of specialization – instead of administrative tasks, the tasks outsourced are of a bookkeeping and accounting nature.
Who should care about virtualization? YOU, Mr & Ms Small Business Owner. Why should you care? LEVERAGE. Outsourcing to a service provider can give you the leverage, the leg up that you need and help put you on equal footing with bigger companies. Think about it, big businesses have been doing it for years (leveraging and centralizing their resources). Big businesses may have satellite locations all over the state, all over the country, all over the world but they have a centralized location that handles certain “global” business functions such as marketing, advertising, and accounting at the “corporate office”.
So what’s the difference between outsourcing (small business) and centralization (big business)? To be honest, if you give it some thought and consideration, there isn’t much difference at all – except the numbers – the number of people employed and the dollars available to spend. How can you leverage and use this big business model of operations to your advantage as a small business owner? Use economies of scale. Think about it…it’s less expensive to share an accounting department with other small business owners than it is to create, manage and maintain one in-house. When you hire a virtual bookkeeping and accounting service provider, that’s exactly what you’re doing – sharing an accounting department with other small businesses. And, let’s take it one step further – in most cases, hiring a service that will function as an ENTIRE department is less expensive than employing ONE bookkeeper! Providing you with MORE experienced professions for LESS money…more bang for your buck, talk about LEVERAGE. Don’t believe me? Give me a call and I’ll SHOW you the numbers…
Agree? Disagree? Have questions? Post a comment…I look forward to hearing from you and reading your comments.
Image Credit: Filomena Scalise/FreeDigitalPhotos.net
What exactly IS cloud computing? As I understand it and in it’s simplest terms, it’s remote software hosting. If you’ve created and stored a document or presentation using Google Docs, then you’ve been exposed to a version of “the cloud”.
Why is this important? As a SME (small/medium enterprise), why should you care? Well, to be honest – it kinda levels the playing field, making it so that the small guys can play with the big boys – at least when it comes to IT. By using remote software hosting/utilizing the cloud, SME’s can do things they couldn’t afford to do before – such as – allowing their employees & contractors to telecommute.
Allowing and encouraging telecommuting is just the beginning of the snowball effect that the cloud can bring. Telecommuting can lead to not only outsourcing your IT functions but now that your staff (employees & contractors) spend less time in the office, they can share space… if they share space, you need less space. Instead of providing 1 desk/1 office space per person, you may be able to cut back to 1 desk/1office space for every TWO or THREE staff members (referred to as “office hoteling”). So in addition to saving on the capital expenditures on IT… converting those to operating costs, you can also save on the overhead costs of office space, computers, telephones, etc. How big the snowball gets is up to you.
Enough about the other benefits…back to the cloud itself. Here are some IT benefits to The Cloud…
Before delving into the topic, I think it would be helpful to actually define what is a “sole proprietorship”. It is a business represented by a single individual without benefit of a separate legal entity (for example, corporation).
This business “entity” type tends to be somewhat popular because of the ease in which it can be “formed”…
As with any business entity type, you should review the pros & cons to decide if that is what is right for you and your business. I thought about going into the pros & cons for this particular business type but decided against it. Instead I have provided a few related topic links that should cover that base pretty accurately.
Disclaimer: I am not an attorney nor is this to be taken as tax or accounting advice. Please seek the advice of a professional for specific insight on your particular business situation.
topic suggested by Malik Alex: Painter & Aspiring Gallery Owner
Related Topics:
Why You Should Never Operate Any Business As a Sole Proprietor
Sole Proprietorship: The Right Business Structure?
