Every Small Business Owner needs to have a bookkeeping system and from that bookkeeping system draft a PROFIT & LOSS STATEMENT – EVERY MONTH
1. If a small business owner does not understand what bookkeeping is, then he/she needs to take it upon themselves to understand, learn and create there own bookkeeping system
2. Being in business is not offering a service the public and charging for that service. A small business owner might as well be spending all their time at a hobby.
3. A business has income. A business has expenses. A business makes purchases to enable the business to offer its services to the public. A business has tax obligations.
4. When a small business owner tells me, “oh, I just send everything to my Accountant,” I cringe.
5. This means on a daily, weekly, monthly, quarterly and sometimes yearly basis, the small business owner has no idea what is going on with the way he/she is earning a living.
6. And, the Accountant has a bookkeeper working for him. So, not only is the Accountant charging for his services, he is making a profit from his bookkeeper doing the small business owners bookkeeping.
7. Does the small business owner want to pay themselves a wage – need to know how much profit the business is earning – sometimes by the day
8. Does the small business owner want to know if they can afford to purchase a piece of equipment to service an account, or grow the business – Need a Profit & Loss Statement
9. Does the small business owner need additional capital to grow the business – Need a Profit & Loss Statement
10. Does the small business owner need to decide if the business is worth staying open – Need a Profit & Loss Statement
11. HOW TO LEARN ABOUT BOOKKEEPING AND THE PROFIT & LOSS STATEMENT
a) If the small business owner has very little knowledge about bookkeeping, I suggest finding a DOME BOOK. A Dome Book is a loose leaf binder which has a very simple bookkeeping system.
A starter system. A Dome Book can be found at Staples, Office Depot, Office Max, Amazon.
b) Don’t let someone else do it for you – unless you know how to do it yourself and what it means.
Take a course, find YouTube Videos and keep watching until all your questions are answered. Take a course at a local Community College or Other School
c) If you decide a) and b) are not for you, and you find an Accountant who will do your books, then spend the extra money and have the Accountant provide a Profit & Loss Statement on a MONTHLY BASIS. Why – So you know what is going on with your company.
12. Conclusion: A small business owner’s most important document is a Profit & Loss Statement. The small business owner needs to know how the business is ‘breathing’. And, be able to make informed decisions sometimes on a daily basis for their best interest and the best interest of the business