Stupid Tax

#13 - Stop Looking in the Rear View Mirror: How to Do Effective Accounting

Nov 27, 2023

Learn how to do effective accounting that provides real-time insights into your business' financial health. Discover the importance of understanding metrics like customer acquisition, advertising effectiveness, and profitable activities. See how a good accounting system can steer your business in a profitable direction by offering critical information like sales levers and growth strategies.

01:07:49

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Quick takeaways

Effective accounting provides real-time insight into business' financial health beyond tax purposes.

Analog bookkeeping can be enhanced by transitioning to digital tools for efficiency and accuracy.

Maintaining simplicity while ensuring accuracy in bookkeeping practices supports informed decision-making for business growth.

Deep dives

Importance of Getting Professional Licensing

Getting a master electrician's license is crucial for starting an electrical home services company. Although starting a handyman business without a license is an option, becoming a licensed electrician should be a priority to expand services in the future and establish credibility in the industry. Pursuing licensing is essential to offer specialized electrical services and grow the business successfully, ensuring compliance with legal requirements and building a strong reputation in the field.

Introduction

6min

Effective Accounting and Business Growth Strategies

17min

Taking Responsibility in Small Tasks

4min

Effective Accounting Practices for Dental Offices

4min

Navigating the Business Dynamics of Medical Practices

18min

Optimizing Bookkeeping for Small Business Success

7min

Entrepreneurship and Skill Building in Home Services

12min

Too many business owners use accounting to essentially stay out of jail, or at least out of trouble with the IRS. They close their books once a year so they can file their taxes, then move on, having learned little of value about the business' financial health in the process. Everything they learn by this accounting process is late, by months and months, usually far too late to do act on. Other business owners might be better, closing their books every quarter, or even monthly, but the problem remains -- they are always looking in the rear view mirror while trying to steer the ship forward.

Mitchell and Scott outline what an effective, useful accounting system looks like. It gives a business owner close to real-time information about the health of the business -- not just the cash flow and the operating income, but things like customer acquisition, number of proposals compared to closed deals, advertising effectiveness, and so on. A good accounting system is like the instruments on an airplane, and the business owner is the piliot. The accounting system is the business "console," with all the critical information for the business owner to steer things in a profitable direction. It also offers deeper insight into the business model. You can learn which levers move the needle on sales, and what actions you can take to grow when sales begin to slow. You can learn which activities are the most profitable, and which ones need to be discontinued. All of these things emerge from an effective accounting system.

That said, most business owners are experts in their field, not in accounting. An excellent bookkeeper can take all of this off your plate and give you the real-time insight you need, while saving you tons of time in the process! Visit Better Bookkeeping for the ultimate solution for small business owners:

https://www.betterbookkeeping.com

Get in touch with the show!

Email: show@stupidtaxpod.com

Mitchell Baldridge

Twitter: @baldridgecpa

https://baldridgecpa.ck.page

https://baldridgefinancial.com

Scott Hambrick

Twitter: @hambrickscott

IG: @ogscotthambrick

https://onlinegreatbooks.com

https://scotthambrick.com