John Briggs says small business owners should hire trained bookkeepers instead of doing it themselves or asking unqualified relatives. Update books monthly to stay on top of finances, and spend your time reading profit-and-loss statements rather than entering data. QuickBooks Online and Xero are the main software options to consider.
What are some small business bookkeeping basics? Basic number 1 is you need to do it. It needs to happen. Now, this video is not going to be a do-it-yourself video. I'm not going to teach you things like how to debit and credit and do journal entries and reconcile your bank accounts. I'm not going to do that. There's lots of free videos on the internet. A simple Google search will reveal those for you. I personally don't feel like as a business owner, you learning how to do those things is a good investment of your time. Look, I'm not trying to be offensive, but your spouse or child is probably not qualified to do your bookkeeping. Find someone who is a trained accountant. If that happens to be your spouse or child, well, lucky you. But we see a lot of small business owners Where by default the spouse is kind of stuck doing this, or they hire one of their teenage or, you know, young adult children to do the books just because of the relationship. And, you know, there's the trust factor in the person, which is great. You trust them as a human, but you shouldn't necessarily trust them if they're not accountants. I just, with our clients that we see who do that, there's so many mistakes in their books. So don't. As soon as you have cash available to do it, I recommend leveraging that cash to free up time so that it is done properly. Again, if you can afford to do this from day one, I would just have a bookkeeper do your books for you. And if you're just starting off, you're a startup, chances are you can get away with a part-time hourly bookkeeper. outsourced because they're only going to spend 2 to 3 hours a month on your books. Now, as you— now, as the business grows, there is the time commitment gets more involved, right? So as a firm, we have thousands of payments that happen every month. So just the sheer volume of accounting that needs to be done, we have one of our team members there in the books very regularly, sometimes even daily. And some of those days, depending on when payments are hitting, it's, you know, 2 to 3 hours to 4 hours on that day. Most of our small business clients though, a monthly frequency is usually sufficient. But the reason I'm saying this is you want to make sure that your books are getting done regularly. Don't wait. Don't let it accumulate. So that you've gone months, 6, 7, 8 months, years without your books getting updated. You— what we want, a basic of using bookkeeping, is that you should be able to look at reports regularly. And depending on how often you want to look at them, that could indicate how often you want your books updated. But that's where your time investment should be. Learning and understanding how to analyze the financial reports, not how to create the reports, not how to type in that you made a purchase at Home Depot or Best Buy. More of, I'm looking at a profit and loss statement, what does this mean for me? That's a better use of your time, and that's a basic bookkeeping skill that as a business owner you are going to want to have. The other stuff, you know, if you're bootstrapping and you feel like you have to invest the time, go for it. Like I said, on the World Wide Web, there is a lot of free videos out there already on how to use like QuickBooks Online, for example. They kind of dominate the market. I'll just briefly share, you know, Xero is another competitor in the space, QBO and Xero. Feel free to do a demo and make the decision yourself on which one you prefer. Most of our clients use QBO. So hopefully that helps. Probably not maybe the basics you were looking for, but as an accountant in the industry for a very long time, these are the basics you need to know as a business owner. That you need to get it done, that it's better to leverage your money so that someone's doing it properly. Don't use a relative just because they're your relative. Learn how to understand reports and how to analyze them. That is a great use of your time. All right, remember, profit is a choice. Have the courage and wisdom to choose it.
