5 Signs Your Bookkeeping Process Is Holding Your Business Back

Jun 21

Many small business owners start out doing their own bookkeeping. I think that's a great thing.

Understanding your numbers helps you make better decisions and gives you a deeper understanding of your business.

But there comes a point where many business owners start asking themselves:

"Am I doing this right?"

If you've had that thought, you're not alone. Here are five signs your bookkeeping process may need some attention. whether you reach out to a bookkeeper for consulting or take a class to improve your knowledge, here are some things to address.

1. You Only Look at Your Bank Balance

Your bank balance tells you how much cash you have today. It doesn't tell you whether your business is profitable.

I often ask business owners:

Is profit increasing?
Are expenses growing faster than sales?
Which products or services or time periods are the most profitable?

If you don't know the answers, it's difficult to make informed decisions.

A good bookkeeping system should help you understand your business, not just track your bank account.

2. Tax Time Is Stressful Every Year

If you find yourself scrambling for receipts, sorting transactions in March, or waiting until the last minute to send information to your tax preparer, your bookkeeping system isn't serving you well.

Good bookkeeping isn't about perfection.

It's about having a simple, repeatable process that keeps you organized all year long.

3. You're Not Confident in Your Categorization

This is one of the most common questions I hear:

"Am I categorizing this correctly?"

The truth is that most categories aren't terribly complicated. But if your chart of accounts is messy or inconsistent, your reports become less useful.

Having clean categories means:

More accurate financial reports
Easer tax preparation
Better understanding of where your money is going

4. You Avoid Looking at Your Financial Reports

Many business owners diligently enter transactions but never review their reports.

Your Profit & Loss statement, Balance Sheet, and Cash Flow Statement tell a story about your business.

If you aren't looking at them regularly, you're missing valuable information that can help you make better decisions.

Also make sure to look at multiple time periods to see the trend. Looking at one total isn’t going to tell you if things are improving.

5. You Feel Like You're Guessing

This may be the biggest sign of all.

If bookkeeping feels confusing, stressful, or like something you hope is correct, it's worth investing some time to learn the basics.

You don't need to become an accountant.

But you do deserve to understand your numbers and feel confident in the financial side of your business.

Want to Learn More?

That's exactly why I created my Bookkeeping & QuickBooks Online classes for small business owners.

The classes are hands-on, taught in small groups, and designed for business owners who want to stay involved in their finances without feeling overwhelmed.

We'll cover: