(Money Matters) The importance of Bookkeeping - Kasfia Rashid

Kasfia Rashid - "Money Matters with Kash the Bookkeeper"

Introduction: 
Hello! Welcome to Money Matters with me, Kash the bookkeeper, the accounting show with NO NUMBERS! Accounting is the language of business. If you own a business or you are thinking of starting a business, you need to know your numbers and how to use them! 

Money matters is all about the fundamental basics of the accounting language, Assets, Liabilities, Owner’s Equity, Revenue and Expenses. These building blocks of business can be arranged and rearranged for a customized experience. Once you understand the basics of any language it is much easier to communicate using that language. 

We are at the end of our accounting tour! Need to catch up? Click here for all of the prior shows:  https://feed.pod.co/money-matters-with-kash-the-bookkeeper

We have covered it all. From Assets to Tax return and most things in-between.  Now that we understand the concepts, we can discuss why keeping good, “clean” books and records is so important to a business’ success. 

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​Show Objectives - The Why

The statistics are appalling.

More than 50% of small businesses fail in their first year and more than 95% of startups fail within their first five years ( Convergehub, 2019) 

Why?

Several reasons! 

According to Smallbizgenius.net 82% of the businesses failed because of cash flow problems, only 40% are profitable, 19% of small business owners work over 60 hours a week, but 86.3% earn an annual salary of less than $100,000!  


Having clean, easy to understand, easy to leverage books and records will help you manage cash flow, price your products/services to ensure a healthy profit margin, and reduce overall stress! There are several other benefits outside of tax preparation, which we will cover in today’s episode. 

Key Issues - Owner Perspective:

As an Accountant, it is my job to help my clients stay on the good side of those stats. Sadly, while 71% of businesses outsource their tax preparation, only 14% of businesses outsource their bookkeeping. Which would be fine, except that 21% of owners feel they don’t have the knowledge to leverage their books! Source article

Thankfully, the accounting world was not left behind when it comes to technology. About 50% of daily accounting tasks can be automated using modern accounting systems. This allows the small business owner to work in their business instead of it on it. 

What You Need to Know - The What 

“Accountant” is a board term denoting anyone with an accredited accounting degree, like “doctor” or “lawyer” or “consultant”. Accountants can have specialties and earn higher degrees and designations.

Certified Public Accountants have taken a series of exams and have licenses in their jurisdictions. They usually complete tax returns, file tax papers, and help with audits.

Bookkeepers are the daily financial transaction trackers. They are the paper pushers of the accounting world and are responsible for preparing documents for all transactions, operations, management, and investors. They also prepare the documents to give to the CPA to complete the tax returns. 

Having easy to understand financial statements comes in handy for several other reasons outside of completing a tax return. To name a few: 

1. You should be checking your tax return against your books and records for errors
2. You will save time every year during tax time and be prepared in case of an audit 
3. You will reduce the risk of fraud monthly cash reconciliations and familiarity with your expenses make it harder for hackers to steal your identity 
4. You will be able to spot cashflow issues before they stop your business. You can plan ahead with real time budgets and grow your business the way you want. 
5. You can speak about your business goals to others intelligently 
6. You will make personal purchasing decisions with confidence 
7. You will be able to make better and more timely decisions for your business when you have your financial picture in front of you at a push of a button 

​What You Need to Do​​ - The How
Keeping accurate financial records can be a major time suck for small business owners. Recent statistics suggest that 20% of a business owners day is spent on financial matters while only 13% is spent on sales. But it doesn't have to be that way, follow these simple bookkeeping tips so you can put that time back into making more revenue for your business: 

1. Automate your bookkeeping system right away, have a professional set it up for you so that it is done correctly.
2. Complete monthly cash and credit card reconciliations 
3. Analyze and compare your financial statements each quarter 
4. Take pictures of all of your receipts and categorize them on a cloud based server 
5. Use an automated time tracking system for yourself as well as all employees 
6. If you're selling products, track inventory from the beginning 
7. Track your miles!

 
Additional Resources 

1. Check out Kash’s Youtube Playlist: Bookkeeping basics for small business owners. 
2. Source Articles  : https://financesonline.com/accounting-statistics-analysis-of-trends-data-and-market-share/#:~:text=67%25%20of%20small%20businesses%20are,accountants%20to%20offer%20business%20advice. 
3. https://www.businessnewsdaily.com/15-accountant-bookkeeper-differences.html http://www.waspbarcode.com/buzz/small-businesses-accounting-stats https://www.visualcapitalist.com/why-startups-fail-20-common-reasons/ 
4. https://www.smallbizgenius.net/by-the-numbers/small-business-statistics/#gref 
5. Need a fillable financial statement you can craft for your business? Click here: https://kashthebookkeeper.com/paid-resources/ and scroll down to Fillable PDF financial statements! On Sale now! 
6. Want more KASH? Sign up for the free newsletter! 

Shows: 
Previous: Profit and Loss: Birth of a Tax Return
Next:  Season 3 Wrap Up


​Written by Kash the bookkeeper  
Check out the last QuickBooks Online Tutorial you will never need here! https://kashthebookkeeper.com/master-your-bookkeeping-in-60-minutes/

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