It may seem like tax season is a long way off, but when you think about what’s coming in the next few months—the Q4 rush to use up yearly budgets, the busy-ness of the holiday season, and then you’ll want to hit the ground running in the new year—there won’t be much time to sort through a backlog of accounting! Waiting until January will put you months behind, getting a clear picture of your business finances now will not only help you make better decisions for the rest of the year, it will also give you the time and the data you need to plan your tax strategy with confidence.
If bookkeeping and accounting aren’t really your thing, it’s easy to keep putting it off because those unknowns create a lot of stress. But you don’t have to know exactly what you need right away to start building financial literacy. If you’re like me, you focus on what you know and try to minimize the clutter, chaos and drama in your life. What can’t be completely eliminated gets thrown into a junk drawer where no one will ever see it. The problem is that “out of sight, out of mind” only works for so long. You’ll have to open the drawer eventually, and by that time, some of your goals may be out of reach. There’s a big emotional component to this vicious cycle, which gives you an advantage: you can follow those icky feelings to find your “skeleton in the closet.” Once you have a starting point, ask yourself what tools or resources you need to get organized.
It’s a Matter of Time
You may be thinking, “that’s easy for you to say, Katie. You’re an accountant!” But I have a confession to make: I too am months behind on my books. It hasn’t always been this way; I have a binder of my financials from the first 10 years of my business. It’s beautiful. I had KPIs, colored charts and graphs. I was on top of it all the time. And then my business grew to a level where I could no longer juggle running my business and managing my books the same way. I make sure my bills are paid, my payroll is done and invoices go out. But like any other entrepreneur, I prioritize growing my business and serving my staff and my clients. Eventually, it always comes down to a decision: if I only have so many hours in a day, should I do my bookkeeping or should I do that client’s tax return and meet the deadline? And the tax return always wins.
As I said, I don’t really allow clutter, chaos and drama in my life. So why do I allow it in my business? If I’m not staying on top of my own numbers, it doesn’t matter what sales plan I have. If I’m not staying on top of my own accounts receivable, there are people who owe me money. Why would I settle for that? The answer is that though this is my specialty, I had to admit that it’s not an appropriate use of my time. I have a strong desire to keep growing my business, and to do that, I need my books to be at the same level of service that I give my customers. But I don’t exactly have an accountability buddy for that, and it wouldn’t be appropriate for a member of my team either because I never want them to have to make that decision between client work and internal accounting.
This isn’t something I knew right away. I’ve been beating myself up about it and feeling ashamed for a couple of years, repeating that cycle of letting my books go and then spending hours sorting through transactions that happened months ago. I had to face the reality that it’s past time I found someone qualified to support me; someone who can make my books a priority. It makes me think of my hairstylist—I always wonder how she can trust another person to do her hair since doing hair is such a big part of her identity. The moral of the story here is that this is a really common struggle, and it takes some guts to hand off tasks that are important to you. So, with this example in mind, what are those unhealthy patterns keeping you stuck? And what commitment are you ready to make to change that? What kind of accountability or resource or support is needed?
Get a Second Opinion
One more example for you: a client came to us who worked with government contracts. She had downloaded a big, complex spreadsheet to fill out and submit as proof that she had used her funds appropriately. She had taken it to another accounting firm who said they were familiar with government contracts, and she trusted them. But based on some simple math, things weren’t adding up to her on a high level. When she asked them about it, their answers didn’t seem to make any sense, and eventually, they kind of ghosted her. She came to us feeling lost and a little dumb because this other firm had said they could handle the job and that’s not what happened.
I had to reassure her that she does know what she’s doing with her business, and her gut feeling was right. She had just trusted the wrong people. In fact, she was the fourth or fifth client to come to me in about a month with issues resulting from a service provider who ended up falling through because the client trusted them. All of them reported getting fishy-sounding answers (or none at all) before they found out they were not getting what was promised.
That’s not to say that you can fully prevent this from happening—I’ve experienced the same thing, too. But what you can do is ask some questions about what the process will look like and even get a second opinion, just like you would with a medical condition, before you sign a contract. You can also trust your gut feelings as soon as things seem a bit “off” and keep searching until you find someone who can communicate complex ideas with you in simple terms. Your gut should be one of your most trusted advisors. Listen to it!
Building your financial literacy is a lifelong journey, and as I’ve said many times before, most of us do not start adulthood with the basic education we need. But as a business owner, it’s important to trust your intuition and believe that you have what it takes to meet your goals, even if it means finding those gaps and filling them in a way that makes sense for you.
Are you procrastinating on your books or getting some fishy vibes from a financial service provider? Let’s schedule some time to talk about it.