Nothing screams “future me problem” more than a shoebox full of receipts, a bank feed with hundreds of uncategorized transactions, and an email inbox filled with support documents waiting to be organized.
When you are busy running a business, these are the last things you want to deal with. Tax season still feels months away, so it never seems urgent. You’re not being lazy, you just don’t have the time to get to it right now.
I’ve heard stories from clients, friends, and colleagues on both sides of this. Some are very on top of their finances and can’t imagine falling behind. But a lot of them dread the thought of tracking every dollar spent and earned, so it ends up at the bottom of the to-do list.
I once had a client who dreaded the process so much because they were entering every transaction into QuickBooks Desktop by hand, straight from their bank and credit card statements. When I showed them how QuickBooks Online syncs with their bank accounts and pulls everything in automatically, their minds were blown.
With the tools we have now, it’s easier than ever to track this data, but it has to be set up properly and maintained regularly.
Not getting started and falling behind are still very common, and the cost is not just the stress of it piling up. Here’s what else it’s actually costing you.
Why it happens
Jobs come first. Without delivering great work for your customers, you don’t have a business. That mentality is right, but the hard truth about running a business is that you have to wear a lot of hats at first, including the accountant’s. For most owners, that’s their least favorite hat, so it keeps getting pushed to “next week.”
That’s understandable. Running a business takes a lot of time and energy, and when you finally come up for air and get a few hours to enjoy the fruits of your labor, the last thing you want to do is sit down in front of QuickBooks and work on the books.
The real costs
Missed deductions
Lost receipts and uncategorized expenses can mean deductions you can’t support, so you may end up paying more tax than you need to. If you’re like most people, Amazon packages show up at your door weekly (if not daily). When some of those are business purchases made on a personal card, they can easily slip through the cracks and never get recorded.
Penalties, interest, and extensions
Being behind makes it harder to file on time and to estimate your quarterly taxes, which can lead to penalties and interest. Staying current helps you avoid big, unexpected tax bills. Your tax preparer can tell you what applies to your specific situation.
Bids based on guesswork
Without knowing how much profit you made on each job, you’re guessing on future bids. You also don’t have a solid way to spot the jobs that lose money so you can stop bidding them the same way.
Cash flow surprises
When the books aren’t current, you find out about problems like late payers or overspending when payroll or a big bill hits, not before. I go deeper on this in my Busy but Broke post.
Missed opportunities
A lender, bonding company, or general contractor asks for financials, and you can’t produce them quickly. Don’t let a messy set of books keep you from jumping on a good opportunity.
Catch-up costs more than staying current
Untangling a year of transactions takes far more hours (or fees) than keeping up monthly. The longer you wait, the bigger the job gets.
Your time and peace of mind
Nights and weekends spent catching up instead of with family or resting. It’s easy to find a distraction that takes your mind off it for a while, but the weight of putting off the books sticks with you until you deal with them.
What getting caught up looks like
The first step is to gather everything you have: bank and credit card statements, invoices, receipts, and emails. Make sure everything is recorded in the ledger, with no missing transactions or accounts. Categorize each transaction in the bank feed, and match income to the right invoices and deposits. Once everything is recorded and categorized, reconcile your bank and credit card accounts month by month, starting with the oldest.
You’ll feel a huge sense of relief once the reconciliations are caught up and you can actually trust your numbers. From there, you can run your monthly P&L and balance sheet, review them for accuracy, and dig into anything that looks off. Then set a monthly reminder so you stay on track.
Like most daunting tasks, it’s rarely as bad as you think. Getting started is the hardest part. Put on some good music, put your phone on do not disturb, and lock in for a few hours just to get the ball rolling. It actually becomes satisfying once you get the hang of it and start feeling confident in your books.
You don’t have to do this alone
Being behind on your books isn’t a character flaw, but it is a weight you carry around, and it’s costing you money. The tools available today make bookkeeping easier than ever, but they still need someone to set them up and keep them current. That’s the part most owners keep putting off.
Honestly, I don’t blame any owner who wants no part of bookkeeping. There are always too many things to do and never enough time to do them.
Thankfully, there are people like me who enjoy this work and like lifting that burden off business owners’ shoulders. I have a lot of respect for entrepreneurs, and I want to help them spend more time growing the business they’re passionate about.
If your books are a year (or more) behind, book a free call. We’ll figure out where you stand and map out a plan to get you caught up.
