7 Bookkeeping Myths
I get asked to do guest speaking a lot on podcasts and coaching programs. One thing that people want to know are bookkeeping myths. Here are 7 Myths about Bookkeeping that I’m going to bust for you today. You ready?
1 | My CPA will do it at the end of the year
One of two things will happen if you trust your bookkeeping to your CPA:
They do it, but charge you an arm and leg for the work they have done and most likely they will only do the bare minimum that they need in order to file your taxes.
It’s done (yearly, maybe quarterly), but it doesn’t help you make better financial decisions that will increase profit. It is just a thing to be crossed off their checklist.
Either way, where does that leave you the rest of the year when you aren’t up to date with your numbers? Confused? And not sure of what is happening financially in your business?
2 | Only big businesses have bookkeepers
False, most businesses past their first year start to feel the need to have bookkeeping support, but aren’t quite ready to add on a full time bookkeeper. Some options are having a consulting call with a professional or outsourcing your bookkeeping. Both of those options give you valuable information with a fraction of the cost a full time bookkeeper would be.
3 | Anyone can do it
Bookkeeping is more than just categorizing your meals and subscriptions. If you are taking care of your own books, you need to have some basic tax and accounting knowledge or else you may be missing out on key deductions and information that would increase your business's profitability.
4 | You only need bookkeeping during tax season
Bookkeeping is more than just for taxes. What happens in the middle of the year when you want to invest in your business? How do you know if those marketing ads are giving you a good ROI? What about when it’s time to hire more team members? Are you ready? Is your business ready? These are questions that bookkeeping & really knowing your numbers can help you answer.
5 | It’s just data entry
Debits, credits, journal entries, depreciation, t charts, deductions, determining cash flow, projections, financial analysis… Does that sound like just data entry to you? 😉
6 | Accountants are better than bookkeepers
Yes and yes! Haha, both are just as important and needed. Think doctors… There are so many different fields that they can specialize in. That’s the same in the financial industry. Some specialize in taxes and tax strategy while others (me) specialize in creating a clear picture of what a business’ financial information is telling them. This helps the business owner make better informed decisions that will then increase their profit!
7 | Accounting software should replace bookkeepers
I would argue that if you are using an accounting system, it’s all the more reason to get help from a bookkeeper. Those systems are set up based on the idea that you have some accounting knowledge. I can’t tell you the amount of times I have had to go clean up years worth of messes from clients who tried to DIY their bookkeeping in an accounting software without fully understanding what they were doing.
Well, there you have it! Did you believe any of these myths before reading? If you have questions on any of these or need a little more myth-busting explanations, you can DM us on Instagram or email us at hello@profitpriority.co.
