7 signs your books and records are not as orderly as you think they are

Accounting books and records
Keeping the books and records for your business in order sounds like an extremely dull job.

But what if getting them in order meant that you understood them better? Could use the numbers to help you make decisions faster? Didn't have to spend your weekends and evenings searching through piles of paperwork to find that missing invoice or receipt?

Over the years we have found that many businesses think their books are in good order, when in actuality they're a complete mess.

The purpose of this post is not to discourage you, or to try to take over the bookkeeping for you. It's essential that small business bookkeeping is set up in a way that the business owner can understand – but best of all, manage with a minimum of effort.

Whether you have a finance team, or a part-time bookkeeper, or you yourself are the finance team and bookkeeper, here are 7 signs that your books and records may not be in the order you think they are (and what to do about it).

Sign 1: You can’t find the records you need, when you need them

So many business owners consider this to be normal.

Not being able to find the financial records you need, when you need them, may be normal for most businesses, but it's not right.

Solution: Use cloud accounting systems and integrations
This is one of the ways that cloud accounting systems like QuickBooks Online (and the related integrations like Expensify) help solve the problem for you. Everything is saved, recorded, and accessible anytime and anywhere. Even on your cell phone.

Sign 2: There is no clear distinction between ‘business’ and ‘personal’ transactions

Again, although this might be typical for small business owners, it's a dangerous practice and needs to change.

This applies particularly if you are operating on your own and it's hard even for you to determine the dividing line between what is personal and what is business. You went on vacation with your family, but then you made some phone calls to customers. You attended a business conference in another state, but you stayed in the area for a few days afterwards to visit with friends.

Solution: Arrange a meeting with your accountant to define where the line is
You may have some catching up to do, so arrange a meeting with your accountant to clarify what defines business and personal. Then as time goes on, if you're ever not sure, just pick up the phone and ask them. (If you don't have an accountant who will do this without charging you every time you call, talk to us.)

Sign 3: Transactions are not classified properly (or not classified at all)

Just having cloud accounting software, or a system for your books and records, is only the beginning. If your transactions are not classified properly, it can cause mayhem with your resulting profit and loss statements, balance sheets, and more.

The biggest challenge is that you may not know how to classify transactions – and if that is the case, it's time to learn.

Solution: Get your bookkeeper to talk to your accountant so they're both on the same page
If your bookkeeper IS your accountant, then you need to have a conversation with them to find out what's going wrong. If your bookkeeper is an outsourced supplier or a part time employee, it's time for your bookkeeper and accountant to talk. Regularly.

Sign 4: Your bank account is unreconciled

Your bank account needs to be reconciled at a minimum once a month – and more often if possible. Thanks to online banking and cloud accounting systems, this is not only possible, but quite easy.

Solution: Integrate your cloud accounting system with your bank feed
QuickBooks Online allows you to integrate your bank feed with your cloud accounting software. Voila – bank reconciliation is no longer something to be dreaded above everything else!

Sign 5: Your credit cards are not reconciled

Your bookkeeper needs to make sure that credit cards are reconciled on a regular basis, because leaving them unreconciled gives a false picture of your financial statements. You're also potentially losing money because of interest charges.

Solution: Make sure your bookkeeper reconciles your bank and credit card regularly
As we mentioned above, this needs to be done monthly at a minimum. Weekly would be better.

Sign 6: You aren’t using a cloud accounting system

In case you haven't picked up on this concept by now, we strongly recommend a cloud accounting system. There is no reason to be using desktop software, Excel spreadsheets, paper and pen systems for your accounting.

Solution: Insist on working with an accountant who will help you set up and use a cloud accounting system and add-on integrations
You'll be glad you did.

Sign 7: You rely entirely on your bookkeeper

This is probably the most dangerous sign of all. We've all heard the stories about bookkeepers or accountants or finance directors who have taken off with significant money from a business. And the business owner cries out, "But I trusted him!'

Trust is good, and when it's well earned, makes your business run like the well oiled machine you want it to. But you as the business owner have the primary and ultimate responsibility for your business' books and records.

If you're leaving absolutely everything about the financials to your bookkeeper, without checking it, understanding it, or even paying attention to it, then you could be in for a very serious problem.

That problem could either be one of honest mistake (your bookkeeper missed something without realizing it), or poor training (they don't have the experience necessary), or worst of all, dishonesty (taking money that is not theirs, or classifying numbers in a way that does not follow tax law).

Is this you?

If any of these 7 warning signs apply to you, get in touch and we will help you work through them, one step at a time. Pretty soon your books and records will be in perfect order!


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