I was recently talking with a photographer who admitted: “I don’t really know what bookkeeping is.” It took some courage to admit that, and I wonder if others can relate.
So here it is in my very unofficial terms: Bookkeeping is the way you track all money coming in and out of your business. It also involves compiling all of the numbers in a way that you can report to the IRS.
It can be done on pen and paper. It can be done on a spreadsheet. It can be done in Quickbooks. The IRS doesn’t really care what method you use, but they do care that they receive the necessary information about your business finances in order to file taxes.
If you were ever to be audited, the more accurate and detailed your records are, the less painful that process will be.
Often bookkeeping is sloppy and practically non-existent, which results in lots of scrambling at tax time. Or it can be organized and simple, even streamlined.
It can be a last minute catch-up at the end of the year. Or it can be a steady effort of record-keeping throughout the year.
Bookkeeping can be stressful. It can keep you awake at night. Or it can be empowering. If you’re proactive, it can propel you towards your goals.
Guess what? You get to decide how you go about your bookkeeping. You’re the business owner.
Even though the IRS doesn’t care how you go about tracking your finances, you should. Keeping detailed, simple records will serve your business by not only giving you peace of mind, but by giving insights into your business so that you can make strategic decisions.
Do you need help getting organized and staying organized with your business finances? We offer complimentary discovery calls to review your bookkeeping system and give recommendations for moving forward.