Some small business owners would rate a trip to the dentist higher than working on their business bookkeeping. Some are downright phobic when it comes to the numbers side of their business. Solopreneurs and those running small operations often treat their finances as an afterthought. “Oh, wait, I need this information for my taxes? Sh*t!”
Financial phobia aside, some are simply overwhelmed by the number of responsibilities they have as business owners. Tracking their finances is one more task on their to-do list they don’t want. And like most things we hate doing, we procrastinate. But like all procrastination, it just makes the situation worse.
I don’t want you to fall into the trap of spending hours and hours at tax time pulling together financial reports. You could spend literally half an hour each month maintaining your finances which would leave a lot less to do at tax time.
I want to clarify that this time estimate is based on using business accounting software like Quickbooks, Quicken, Wave, Freshbooks, or others. Any one of these tools allows you to create a structured accounting system. If you run a small business, you should have a structured accounting system. Preferably something more than Excel spreadsheets. And definitely more than receipts in a shoebox.
A well-structured accounting system streamlines your financial record keeping – i.e., makes it less time-consuming. And the structure in your system doesn’t just come from the tool you use like Quickbooks or Wave; it also comes from maintaining it regularly. Like spending half an hour a month reviewing your accounts.
The takeaway here is to invest in a better system and work in smaller increments more frequently to keep your business’ finances from becoming a huge chore. Spending six hours over an entire year to keep your financial records tidy is better than six or more hours two days before you have to file your tax return.