I Just Don’t Have Enough Time…

Small Business owners quite frequently find themselves saying “I just don’t have the time” or “there just isn’t enough time in the day.” Running from one job to the next, desperately trying to ensure they don’t forget to put out the next fire or forget to call back customer.

Ever ask yourself what your time is worth? Are there projects within your business that you constantly put on the back burner for another day? Then that time never comes, and your workload has only piled up to require even more of your time.

Well you are not alone in the struggle. In fact, the number one task often set aside to handle later is the business’s bookkeeping. Sure, some feel bookkeeping is easy, there’s no need to pay for the service when you can do it yourself. Right?

If your idea of bookkeeping is letting the stack of paperwork continue to grow to a mountain on your desk, while checking you balance at the bank every time you go in to make a deposit, it may be time to look at other options. Your time is valuable, and your money is even more valuable, it’s the reason why you are in business for yourself. It makes no sense to put your money on the back burner, while you, the business owner puts out all the other fires.

OK, back to the what is your time worth? Most professionals book out at hourly rates of $30.00/hour on up. Now that’s a low figure for most but for today it’s a good starting point.

Now let’s think about all the tasks associated with maintaining the books for your business and how long does it take.

• Reconciling statements for every bank, credit card, and loan account:
  • The amount of time it takes depends on how many accounts you must reconcile. For a business that has 2 bank accounts, and a credit card you can easily assume about 2 hours a month of your time. Of course, if you are manually entering in all your transactions this can take even longer.
    • Value 2 hours*$30.00/hour= $60.00 of your time.
  • Why do you do this monthly and not yearly? Waiting to reconcile can cause you to miss overcharges that banks impose. You could also be the victim of fraud and the sooner you review a statement the faster you can address a serious issue and stop fraudulent activity if needed.
  • Handling this once a month decreases the amount of time it takes to maintain balanced books and ensures your financial reports are accurate.
  • Are you properly classifying your charges to ensure the best tax benefits for your business?
• Sending out invoices to customers
  • The busier you are the more time this task takes. It takes even longer if you are handwriting invoices or if you are using an invoice creation software that forces you to manually complete each line item every time you make an invoice.
  • Estimate this task takes you 4 hours per month
    • 4 hours *$30.00/Hr= $120.00
  • You need to get paid! Handling this task as you complete work is a much more efficient way of going about invoicing. You can streamline this process with converting to a cloud-based accounting platform that will allow you to invoice a customer anytime and anywhere you have internet. Save money by sending out invoices via email, and text.
    • This will also allow you to save your services in your own invoice, so that the next time you sell that service creating an invoice takes a fraction of the amount of time.
    • You get a digital stamp that shows when your customer read and reviewed your invoice, there is no longer a need to wonder if they received the invoice or not.
  • This allows your cash flows to become more predictable and you get paid faster!
  • No more delay from the post office waiting for your customer to receive an invoice!
  • What about offering more ways for your customer to pay you? This only increases your odds of getting paid faster. Moving away from the mailed paper invoice is perhaps on of the easiest things you can do to increase the speed at which you get paid.
    • Look into offering free ACH bank transfers, and credit card payments. Many of these solutions can be offered to your customers for a low cost if not for free. Personally, I love getting invoices that allow me to pay online simply by pushing a button on the screen. Fast, free and easy.
  • Collections:
    • In a perfect world you have none but assume you spend 1 hour a month sending out statements and making phone calls to customers who have not paid their bills.
    • 1 hour * $30.00/Hour = $30.00
  • Handling your accounts payable. Bills, bills, bills. Do you know how much you owe other people? Have you taken the time to review your bills to make sure you do not need to bill them out to another client?
    • Estimate about 4 hours a month * $30/Hour = $120.00
    • Vendors make errors on invoices just like you can. Taking the time monthly to review invoices gives you the chance to dispute a charge that may not be a valid charge. Most business will allow you 30 days from the date of invoice to dispute an invoice, after that its considered you have had enough time to review the charges an agree to them.
    • Relying on your memory or waiting for people to call you when bill is owed is not a good way to manage your expenses. Think about how you would like to get paid? On time, right?
    • Not taking the time to input bills makes it impossible for you to estimate your cash flow or have any of your financial reports be accurate.
  • Gathering receipts for all the charges made the pasts month that were business expenses and filing.
    • For the average small business this takes about 2 hours a month
      • 2 hours * $30/Hr = $60.00
    • Collecting these in a shoe box and handing off to your accountant is the number one reason why getting your taxes done each year cost so much!
    • There are applications and software out there that allow you to capture a picture with your phone, and then you can throw that receipt away!
    • You can easily make this task much more bearable simply by documenting your charges as you make them. Either do it at the time you spend the money or set a time each week you input this information.
    • This task can make or break you in an IRS audit. Receipts and documentation are required for your business purchases. Would you be covered in the event your business was audited?
  • Monthly Financial Reports: Preparing, reading, and understanding what they are telling you about your business
    • Estimate about 2 Hours * $30/Hour = $60.00
    • Why? Well the whole reason for running your business is to make money. The only way you can tell if this is really happening is if you are reporting the whole financial story about your business.
    • You should review a Profit and Loss Statement, Balance Sheet, and Cash Flow report Monthly
      • These reports will tell you how profitable you are, where you are losing money, and where you can increase your profitability. Cash flows will assist you with planning how and when to spend your money.
      • There’s a difference between making money and cash flow. At some point if you are not profitable your business will hit the wall. It’s a common misconception that always having money to put into the bank means you are making money. While this is true to some extent, to look at your income without considering expenses you leave yourself open to a false truth.
        • Without reviewing where the money is going to monthly only exposes your risk of losing money. Truly understanding where your business sits financially entails looking at the entire picture. Regularly.
      • Sales Tax, and Payroll Taxes
        • Estimate about 2 hours *$30.00/Hour= $60.00
        • Depending on your volume you may be filing monthly, or quarterly.
        • Being late with filing taxes can cost your business some serious late fees.

We have now laid out the basics of what needs to happen on a monthly basis with your small business’s bookkeeping.

• Reconciliation= 2 Hours = $60.00
• Accounts Receivable = 4 Hours = $120.00
• Accounts Payable = 4 Hours = $120.00
• Collections= 1 Hour = $30.00
• Receipts, Statement Filing = 2 Hours = $60.00
• Sales Tax, Employment Tax reporting = 2 hours = $60.00

For our example today its estimated to take this business owner approximately 15 hours a month to complete these tasks at a value of $450.00

Now think about a business that employs a full-time office assistant at 8.00 an hour to handle these tasks in a 40-hour week,  your looking at paying $320 a week or $1280.00 a month.

Remember what started this conversation is our lack of time, perhaps one of the biggest favors a business owner can do for themselves is to hire a bookkeeper. Gaining back the time from an activity that most do not enjoy and are not detailed at enough in the first place not only saves you money in the long run, you get back all that time to handle running your business gaining new clients. Leaving you to take care of what you do best.

Hiring an accountant to handle bookkeeping can become very expensive. You need an accountant at tax time, the rest of the year small business’s need a diligent, detail-oriented bookkeeper that can accurately report the finances of your business so that when tax times comes, your accountant can crunch those numbers and save you money. Ignoring your bookkeeping or bringing in the shoe box full of receipts yearly to an accountant cost more money and is not an accurate way to depict your business’s finances. Being able to make crucial financial decisions immediately become more and more important the busier your business becomes.

Ready for the best news? Blue Water Consulting Inc can help your small business with its bookkeeping on a value subscription that will ensure your bookkeeping is accurate, maintained, IRS compliant, with no long-term commitments. With our value-based business subscriptions you pay the same amount every month and can cancel at any time.  They include your financial software as well as top notch service, and speedy responses to your questions when they arise.

Gain back your time, increase your profitability, and experience the difference accurate financial reporting makes to your business. We can help with all your bookkeeping needs typically for less money than what you would charge for the time to handle these tasks. We customize your package to your business’s needs, insuring you get the best value for the money you invested. Only pay for the services you need! When tax time arrives, you can rest easy knowing we will send your business’s file over to your accountant to have your taxes prepared on time, accurately.