You’ve probably never thought about it this way, but record keeping is a language. In fact, it’s a series of different languages, depending on who will be using or reading your records. While the languages are different, they have the same roots. Just as French, Spanish, Portuguese, and Italian all come from Latin (Romance languages—because of the Roman roots), English also has a strong Latin influence. If you listen closely to those other languages, you’ll find you can understand them a little because you speak English.
It’s the same thing with your records. The basics are the same across the board. The words used to describe concepts and transactions are the same, but the nuances and details are different the higher up the food chain your business gets.
Many small business owners are so busy trying to run their businesses, hold it all together, and keep the bills paid that there just isn’t time for bookkeeping, too. Besides, who knows how to do it correctly? If you can’t do it correctly, it can be daunting, can’t it? But you have to do it. Really, really, you do. If you don’t keep decent records, how can you possibly know how your business is doing?
Some people operate on the principle that if there is money in the bank account, everything is fine. One set of business owners I knew used to call up the bank in the morning to find out their balance. (Today, of course, you can look it up online.) If there was money in the account, they wrote checks. They didn’t take into account the fact that the checks they wrote yesterday had not cleared yet. As you can imagine, they were bouncing checks all over town without understanding why. Their employees understood. The minute they got paid, they ran to the bank to cash their paychecks before any of the owners’ wild checks hit the bank.
When you’re just starting out, you do your own “expense reports” to give to the bookkeeper. OK, when you’re really starting out, you hand over a shoebox full of receipts with a slightly apologetic look on your face and say, “Can you make sense of this?” Once you have a system in place, then it’s up to you to mark your receipts. Well let me tell you, when you get to a certain earning level, it is actually more practical to have a savvy bookkeeper do it all, import the data from the bank (so that means limiting cash spending and using debit cards for easy tracking), match up the data to appointments in the calendar, and only spend 10 minutes asking you to identify the dozen or so transactions from the month that she can’t figure out. Your time spent on bookkeeping per month? Ten minutes. It all boils down to having a bookkeeper who is a self-starter and understands your habits.
But don’t forget quarterly audits, not done by the bookkeeper, but by a third party. I once discovered my bookkeeper had been writing herself checks (using my signature stamp) for her pay. Rather than putting herself on payroll, she had been deducting herself as office supplies so she wouldn’t get a 1099 at the end of the year! Tsk-tsk! I would never have found that without the audit. So, yes, delegate, but more important, make sure the person you are delegating to has impeccable ethics and independent oversight by a quarterly accounting audit.