Two thirds of businesses survive two years in business, 50% of all businesses will survive five years and only one third will survive 10 years. The primary reason is thought to be lack of financial knowledge, tracking, cash flow and funding.
If revenue was lost for two months, 86% of small businesses would need to supplement funding or cut costs. We see what happened when COVID shut down many businesses.
Why is bookkeeping throughout the year important? It helps you in all facets of your business. You need to prepare a budget so you can be sure you are going to make enough to pay bills all year round. We live in a seasonal area and we need to save enough money during the summer to pay bills through the winter. If you are running a business where you prepare bids, you need to know if you are bidding correctly and making money on your jobs. It is also important to see if your marketing strategy is working or do you need to change it. What if your sales department isn’t keeping up with your sales forecast because they don’t have enough people or enough training. All of these problems will stick out if you are preparing financial statements. Always do an analysis of your financial statements and look for expenses or income that look out of sync compared to prior periods or your budget.
You know what your strengths are and if you know you won’t keep up on the bookkeeping, you need to hire someone to do it for you. You should have some kind of accounting software to pay bills, pay employees, prepare payroll tax returns, pay sales tax, invoice customers and prepare financial statements.
If you keep up to date with your bookkeeping, tax season is easy. You can ask your accountant any questions you may have and give them your financial statements to prepare your tax return. You can meet with an accountant for free to ask for an approximate cost to help with your bookkeeping or to just do your tax return.
If you go to michigansbdc.org, click on “Browse Trainings & Events”, and then click “On-Demand Webinar Library”, they have a series of one hour long webinars to learn QuickBooks Online for free along with many other free webinars. SCORE.org also has a library of live and recorded webinars for all kinds of topics. North Central Michigan College offers bookkeeping, accounting and many other business classes. The important thing is that there are many ways to get help, some of them free.
Sharon Schappacher has an accounting and hospitality background and volunteers as a mentor with SCORE’s Tip of the Mitt chapter. To request the free, confidential mentoring services which SCORE offers for small businesses, go to SCORE.org or call the Petoskey Regional Chamber of Commerce at (231) 347-4150.
This article originally appeared on The Petoskey News-Review: Bookkeeping throughout the year