Why Is Bookkeeping So Bad In Most Small Businesses?

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In most small businesses that keep their bookkeeping in-house, bookkeeping is done poorly.

And most small business owners don’t even realize how many problems their in-house bookkeeping is causing.

The bookkeeping system performs very badly because of how it begins.

— The Typical History Of Bookkeeping In A Small Business

The business owner lacks experience and expertise in bookkeeping and accounting.

Still, the owner assumes he needs to keep the bookkeeping in-house.

Because the owner doesn’t want to pay much, he hires a bookkeeper willing to work for $15 to $20 an hour or less. To hire a fully competent bookkeeper would cost more.

The bookkeeper hired is usually able to do only about 75% to 80% of what needs to be done.

This leaves a competence gap.

The owner tries to fill the gap by using an outside accounting firm. He expects the accounting firm to correct the bookkeeper’s mistakes and to do the taxes.

— Battles Between Business Owner, Bookkeeper, and Accounting Firm

This arrangement leads to 3-way battles between the business owner, the bookkeeper, and the outside accounting firm.

The CPA constantly asks the owner for finished books. The business owner asks the bookkeeper for this information, but the bookkeeper hasn’t quite finished them yet.

This game can go on until the end of the year. Usually, it’s the tax deadline that forces the game to finish.

The bookkeeper finally gets the complete paperwork to the CPA just in time for the CPA to prepare the tax return.

When the tax return is finished, the business owner finally finds out how much profit the business made in the prior year.

With this bookkeeping arrangement, the owner wastes a lot of time fighting bookkeeping battles.

And the arrangement fails to give the owner the timely, accurate financial information needed to make profitable business decisions.

But with current network technology and cloud computing, you can completely outsource your bookkeeping and accounting!

You free up huge chunks of time so you can start working on your business. And you get the accurate financial information you need to make profitable business decisions.

And your total annual costs will probably be many thousands less than having an in-house bookkeeper.

— Bottom Line

You’ve probably seen the UPS commercials about logistics.

UPS argues that small and mid-sized businesses don’t need a large warehouse, distribution center, or global network to access the new logistics. They just need UPS. UPS has already built the systems.

By tapping into those systems, you can operate your business with the heft of a big guy, no matter how big you actually are.

UPS is right!

Exactly the same logic applies to paperless office systems and to outsourced bookkeeping and accounting. The systems exist. And they are easily and inexpensively available to small and mid-sized businesses.

By outsourcing your bookkeeping and accounting, you get the accurate numbers you need to manage your business.

By going paperless and outsourcing your bookkeeping, you free up huge chunks of time.

You can spend that time growing your business!

You can start working on your business, not in your business.

You can analyze your business so you know, for example, which 20% of your customers are generating 80% of your profits. Then focus your efforts where they produce the greatest results.

Your small business achieves big leverage.

And you’ll have the accurate financial numbers you need to decide what’s working and what’s not.


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