Many times, I speak with entrepreneurs who have “turned all that stuff over” to an accountant. Meaning, they don’t look at or control their business money. I get it. The money stuff isn’t as sexy as a new logo or website. The truth is, your bookkeeper, accountant, or payroll company is NOT responsible for your bottom line. They are responsible to keep you compliant and out of trouble. Here is my take: You control the income, let your accountant do the accounting.
These small business professionals SHOULD take care of the reporting and advise you on the best way to manage your responsibilities as it pertains to taxes, withholding, unemployment insurance, etc. But they are NOT invested in making sure your profit margins are “right.” That’s YOUR job. The thing is, YOU have to control your income. Don’t delegate that part of your business.
You know what comes in, and decides what goes out, to whom, and when. That’s it. Let your payroll company cut the checks and deposit your taxes. Let your accountant file your taxes and help you stay compliant and legal.
First, don’t ignore the money and just let it flow in and out without intention.
Make managing your money an intentional act. Take the bills off autopay to protect your cash flow and put dates on the calendar for your paychecks and for tracking your money. It’s so easy nowadays to just let it run on it’s own, but when you aren’t looking at the money management, you aren’t looking at the health of your business.
Second, prioritize your expenses and pay them in the right order to keep the doors open.
It seems like everything points back to your Breakthrough Number, doesn’t it? This is because it is the simplest way to holistically look at all of your expenses and to calculate the minimum amount of money you need to bring in every month. If you don’t have your Breakthrough Number yet, it’s free to do and typically takes under 30 minutes! Grab your workbook here.
Third, Track every dime that comes in and give every bit of money a job to do.
This is the part many people don’t embrace. You have to write everything down. It is way too hard to try and remember where your money went, what got paid, and how much is being used for different things in your business. It is also very simple to do. Just write down your total income for the week (in a log, on the computer, in an app, wherever) and everything you paid or funded for that week. The number “in” needs to equal the number “out.” Meaning, just note where it all went. You may have some left in the operating account. Cool. But note how much came from that week’s sales.
Finally, have your accountant do your reports and taxes and compliance stuff.
Small businesses need accountants. I would never try to navigate the tax stuff on my own. This is why you hire professionals. You still need your accountant and bookkeeper and payroll person. Particularly if it takes you away from your business and outside your zone of genius.
You do not want to make a mistake here. Use their reports to help you make financial and tax decisions. Just know that they aren’t going to tell you how to make more profit every month or to find opportunities for growth.