Do You Keep Your Books In Real Time? Or .... Do You Have The Tax Time Blues??
In this issue…
A better way to keep up
469 words, total reading time 2-1/2/minutes
Despite being pretty good at QuickBooks and admin processes, the VITAL
bookkeeper has a bad habit that comes around to bite us every year about this time...
Paid bills and receipts tend to get shoved into a folder and not actually entered in QuickBooks until, well, tax time. This is a prescription for losing money.
"Even plumbers have leaky pipes"
That's what a fellow advisor told me when I confessed that we didn't always follow the practices we recommend to our clients. Nonetheless, it's embarrassing to be guilty of not following one of the most important administrative practices of all. Namely...
Enter info into QuickBooks in as close to "real time" as possible.
We’re not saying you need to enter stuff in QB every day. But “counting the money” daily is better than weekly is better than monthly and here's why...
The longer it takes to actually count the money, the less there will be to count.
People forget. QuickBooks doesn't. This is irrefutable.
Forgotten Revenues, Forgotten Costs, Lost Time
If you don't ask to get paid for your work, you likely won't get paid for your work. Yet we see many, many companies allow project reconciliation to drag on and on. They wait for information to be gathered and collated. Often, they then wait for the too-busy owner to approve charges before the client is finally billed.
All this time, valuable information about what got done and what got used is being lost and/or forgotten.
Even worse - and this is the part that makes us vow to "fix our leaky pipes" - it takes longer to collect and enter data a month or two or six months later, than to enter it in real time.
(In "real time", there is no need to reconstruct what happened, because what happened is right there in front of you. The “investigation” that must happen when events are recorded later is very, very costly.)
There must be a better way
There is. It's a pretty basic 3-step discipline:
1) Document job progress in real time. What got used, what got done. (Which technology you use, pencil or iPad, doesn't matter.) "I don't have time" is NOT a valid excuse!
2) Put the documentation in a "To be entered" folder. You should put all your bills in such a folder, too.
3) Have a regular routine for entering the job progress & bills into QB. Daily at best, weekly at worst. If you're a sole proprietor without a bookkeeper, this might be a Saturday routine. But it should take only an hour or two, once you get the routine in place.
Note to integrators who do really big jobs that take a really long time: you have a lot more to lose and forget if you don't do your project admin weekly!
As you work to instill better counting habits in your company, remember this: You only need to worry about taxes if you’re making money. Here’s to making money!