In this episode of 'Savvy Anto's Money Moves,' host Antonette discusses the importance of entrepreneurs delegating bookkeeping and accounting tasks. The episode emphasizes that entrepreneurs should focus on their core business activities to foster growth and innovation.
In this episode of 'Savvy Anto's Money Moves,' host Antonette discusses the importance of entrepreneurs delegating bookkeeping and accounting tasks. The episode emphasizes that entrepreneurs should focus on their core business activities to foster growth and innovation.
Welcome to Savvy Anto's Money Moves, the podcast where we explore the secrets of business success. I'm your host, Antoinette, and today we're diving into a crucial topic, why entrepreneurs should never waste time on their own bookkeeping or accounting. Picture this, you're an entrepreneur, passionate and driven. Your day starts with a burst of creative energy, the ideas are flowing like a river. But then, you hit a wall. The wall of numbers, receipts, invoices. Suddenly, you're not an entrepreneur anymore. You're an accountant and a bookkeeper. But here's the twist, what if I told you that you don't have to be, and that there's a way to keep your entrepreneurial spirit alive and kicking without getting bogged down by the nitty gritty of accounting? Outsourcing! That's right, hand over the reins of your bookkeeping and accounting to experts., entrepreneurship is about growth. Innovation, pushing the boundaries, and when you're stuck balancing books, you're not growing. You're stalling. To ensure growth, success, smooth operations, and accurate management of your accounting, bookkeeping is necessary for any skilled businesses. And for small businesses, This job becomes even more crucial because of the limited resources. Small businesses who choose to invest in an outsource accounting or bookkeeping service, they usually do much better than those small businesses who often struggle to keep up with the accounting and bookkeeping needs of the business. And this is better because investing in an in house expert is going to be an even more expensive option for a small business, which may not even have enough accounting work to even handle a full time accountant. Here are some of the benefits of why you should outsource your accounting and bookkeeping. One is just those regulatory changes. Business finance is a crucial operation because of the complexity of the legislation and the regulatory changes. And according to statistics shared by Accounting Today, 51 percent of CPA firms in the USA found it difficult to cope with all the change of regulations in accounting. Now listen to me when a CPA firm says that they find it difficult the financial experts find it difficult to keep up then you can really think about the complexities that a small business would face in this regard. When you invest in outsource accounting bookkeeping, you don't need to worry about all the regulations that keep changing. The company offering you the outsource services will handle all this extra work for you. Not only that, small businesses that use outsource accounting services, a lot of them just look at it as, oh, it's an added expense. But in reality, it's completely the opposite. This is a myth. It is not an additional expense. A small business can save 30 to 75 percent of their overall expenses by outsourcing to a financial management firm. They actually save money. That expense that you spend to hire them is offset it by the savings that they're giving you. Not only that, isn't it nice to have that expertise just at your disposal? You're going to have a team of certified and experienced accounting professionals. Maybe you even have a CPA. They're going to have all the best tools and technology to serve you with accurate results and they're going to ensure that you get the best job done and you get expert services at affordable costs. And most of them are very efficient and accurate. CPAs and accountants, they usually have a rich experience in this industry and they're able to spot any little silly mistakes or easily overlook errors, and they easily adapt to managing books and accounts that have missing details and entries because they have the expertise. They're even trained to work under pressure and in stressful environments. So you're always going to get excellent and accurate, efficient financial management for your business. When we're talking about mistakes,, even minor accounting errors can have significant consequences for your business finances. You can overstate your cash flow. And this is really crucial because many businesses they've overstated how much cash they had on hand and by overstating that, it makes it harder to manage your cash flow. It makes it harder to pay your employees and vendors and even fund important business purchases. Incorrectly tracking income. If you don't track your business's revenue correctly, you can end up over reporting or under reporting your income. And this right here will have serious tax consequences down the road. Another common mistake that businesses make is failing to track their expenses. This is going to increase your taxable income and cause you to pay more in taxes at the end of the year. Who wants to do that? Who wants to pay more taxes? And then when vendors send you invoices for services rendered, likely they have a due date. It's about 30 to 60 days. If you don't stay on top of your accounting, it's easy to overlook these due dates and pay your invoices. And this can lead to late fees and even worse, damage the relationship with your vendors. A big one is a lot of small business owners, often blur the line between their personal and business finances. And it is understandable, especially when a business is just beginning to find its footing. Maybe you go to Target or order something off of Amazon just to get some office supplies because you're already there. You get a few items for your home. But this goes beyond just combining business and personal items on a single receipt. More than one quarter of small business owners don't have a separate bank account for their business. And this is according to a survey by Clutch. And this is not a good move. Using one account can make it tougher to sort out your business and your personal transactions, and this can cause significant issues when tax time comes around. With sloppy financial accounting, You may even miss an expense that you could have listed as a business deduction. Now, who wants to do that? So blurring the lines between business and personal accounts, it can also be a problem when you're applying for a loan or a line of credit because lenders, they want a complete and accurate snapshot of your business's finances when they're considering your loan application. And if you've been using your business and personal bank accounts interchangeably, break that habit. Open a separate business bank account. You'll likely get some incentives from the bank to do it wherever you have your personal account at. They'll give you an incentive. And if you're shopping in a bind, always separate your business and personal purchases so you can set aside those business receipts. If you are using a personal credit card for your business purchases, apply for a business credit card. Major banks like Chase have cards that cater to small business owners and offer cash back bonuses on purchases. I know do it yourself tax software may be suitable for preparing a simple tax return. So it can actually be an attractive solution for small businesses looking to save money on an accountant or other tax specialist. A DIY approach, you may stumble if you haven't taken steps along the way to document your company's finances properly. And no one enjoys piecing together a year's worth of receipts and documents in April because they were disorganized the other 11 months of the year. And that goes double for businesses, which must navigate a complicated route to comply with uncle Sam's increasing complex tax laws, and everyone gets complacent about receipts and records now and again. The best approach is just minimize the errors and oversights by ensuring your business uses an accounting system that seamlessly tracks company expenses, payroll, and other fundamental components of your business's profit and loss statement. The bottom line is enlisting a qualified tax professional check in periodically and do tax related organizing sweeps of your business can help you spot potential savings in things that your business is. and things that your business could be doing differently well before the tax year is over. Best of all, when you have that army of experienced accountants working for you, you can channel your energy and resources and just focus on the core of your business. When you use outsourced accounting and bookskeeping services, You're stress free from all the accounting jobs, such as managing your books, handling tax season, keeping payroll on time. You get to put all your focus on your business, expanding, and the growth of your business, and your success. Imagine freeing up all that time, all that mental space. Imagine what you could do with it. New strategies, new ideas, new connections. That's the beauty of outsourcing. It's not just delegating tasks. so I want to share a story with you about actually one of our current clients. And I remember back when we met, he was a small, ambitious real estate company. He's very charismatic, driven the CEO. Let's just call him Jacob. hE made a name for himself by just transforming like overlooked properties into really beautiful spaces, literally turning junkers into jewels. And he was a true entrepreneur at heart. He believed in. Managing every aspect of his business personally, including the intricate details of bookkeeping and accounting. So his business grew and so did his portfolio. He went from just, little suburban homes to office buildings and the scope of the project expanded as you can imagine. So as him and his team celebrated each success behind the scenes. He was finding himself increasingly entangled in a lot of financial complexities to say the least and he spent a lot of long nights just pouring over spreadsheets and trying to balance budgets, managing cash flows, but he was just convinced that he needed to be directly involved. Like it needed his direct oversight and that was the key to their success. He did have a company project manager. And she did start to notice a shift. She was saying that there was delays in vendor payments and that became more frequent and there were crucial investment decisions that were being postponed due to Jacob's unavailability. She even suggested at that point to outsource their accounting actually to our firm, but he was afraid at that time. He was afraid of losing control. And he believed that he was saving money, that this was a cost savings by him, him doing it himself. And so he declined. And he argued that no one else could understand all the financial intricacies of their business as he did, only he could understand that. And so He ran a bid to develop a landmark commercial complex. This was huge. This project promised to really put them on the map. However, the financial demands of this project was unlike anything they had faced before. So while they were managing this project, Jacob's oversight of the financial details It actually led to a series of miscalculations. Yeah, so there was some unnoticed tax liabilities. There are some mismanaged fund allocations and those things began to strain the company's resources. Those accounting errors, they started the snowball and the contractors, they actually threatened to walk off the job. They were sick of the late payments and they were just over it. The investors, they grew restless. The staff, they all felt the tension. The morale was just dropping, Jacob's focus was just on the numbers and he had forgot about the people and the projects and his project manager. Once again, she did raise the issue of outsourcing the accounting and bookkeeping, but at that point, Jacob's pride and his fear of just having. This external outside interference coming in and taking over, it just really kept him from accepting the help that they desperately needed at that point. It started facing a lot of financial audits. The investors started filing lawsuits. The reputation just tanked. It totally tarnished it. And Jacob, he realized his mistake too late. The company was too burdened by the dead and legal troubles. And so they faced bankruptcy. So after everything was all said and done, Jacob did, reflect on what happened in that journey and, his passion for real estate and just his belief in self reliance is what brought the early successes in his company. But unfortunately that also led to the downfall. He did acknowledge that, his resistance to outsourcing was driven by this desire. He just wanted to save money and he wanted control. He didn't want to lose that control. And that had really blinded him to the complexities of managing a growing business finances. The good news is that he eventually did start a new venture. This time with our firm, a team of professional accountants and bookkeepers. And he started that right from the start. And he learned that in business, recognizing and delegating tasks outside of, your expertise, it's not a sign of weakness, but it's a strategy for sustainable growth. And so by learning that, that remained a lesson in his past, that he had learned about being resistant. Also a reminder that there is a hidden cost of control. in the world of finances. Thing is just don't be afraid to outsource. It'll actually be the best decision for your business. It's opening the doors to new possibilities. I hear you ask isn't it risky to just trust someone with my finances? And that's a valid concern, but think about it. Would you try to fix your car's engine if you're not a mechanic? No, you take it to a professional. Same goes for your business finances. And I know trust is a big thing. I hear you. This is your finances. This is the backbone of your business. A lot of it is personal and confidential and it does take a lot of trust, right? So beyond looking for when you're looking for a service or a professional accountant or bookkeeper, definitely, you make sure they have the proper credentials. That's a given that they have the expertise that they can do the job. Definitely, look that you're compatible. Maybe finding someone who's a good fit for you personally, who makes you feel comfortable and confident about your finances. Every accountant has a slightly different style and philosophy. So just make sure you talk to them about their individual approach when you're looking for a accountant. Here's a few ways to start your search. Referrals are usually the best way to, find a trustworthy accountant. Ask your friends, your family members, and any colleagues if they know anyone that they can recommend to you. You can seek recommendations from your local chambers of commerce or other small business associations. There's different industry organizations that have accountants. You can check the online reviews website. There's places like Angie's List and Yelp to help you discover accountants in your local area, and you can use that to vet them and look for good reviews and absolutely ask questions before you hire an accountant. What is, some of the things you could ask is, what degrees do you have? What's your area of specialization? What size clients do you usually work with? Large businesses? Small businesses? Sole proprietors? That makes a difference. What are, when are you available? Can I reach you outside of business hours if necessary? I do know some clients have non traditional hours. That's something to think about. Are you a member of any professional organizations? And then lastly, what fees do you charge? And typically they don't really have a number to just throw out. A lot of times it is based on your situation. So a lot of times you have to sit down with them and they have to learn your situation so that they know what would be fair to charge you. And to be honest, like a accountant doesn't have to be perfectly qualified, right? They just need to have the experience and the expertise in your area of need. So they may, some may not be the right accountant for you, but maybe be better suited for someone else. And vice versa, maybe the perfect accountant for you may not be the perfect recommendation for someone else. And when trusting your accountant, one of the biggest things outside of the obvious, making sure that they're competent to do the work, is maintaining that good relationship. When you're looking for an accountant, you should take a long term view. As this person or company will get to know you and your business over many years to come once you find an accountant you can trust, make sure to take the steps to develop and maintain a good relationship. Obviously, you'll start with a written agreement, typically called the engagement letter. That's going to outline all the details of the work that you'll be doing together and it's always best for both parties to have clear expectations of the work in arrangement from the start and your accountant would likely guide you, in the next steps of working together as far as the documents and stuff that they need and so forth. So a good rule of thumb. As far as maintaining that good relationship is to speak with your accountant at least once a month. Building an open and frequent channel of communication is going to help you stay on top of your finances and is a good opportunity to ask questions and voice concerns aNd view financial statements. As we wrap it up, I want you to close your eyes for a moment. Envision your business, your dream, reaching heights you never thought possible. Feel that pride, that joy. This is what awaits when you focus on what you do best and let the experts handle the rest. Remember your time, your creativity, your vision. That's your true capital. Invest wisely until next time. Keep dreaming. Keep growing. This has been Savvy Anto's money moves. I'm Antoinette and I'm signing off. Stay inspired.