The Internet is an incredible resource, but not an infallible one. Because anyone can contribute, it can be hard for even the savviest Internet users to know whom to trust. The anonymous reviewer who swears by Phil’s Pizza may be Phil himself! When you put too much stock in that anonymous reviewer, the worst case scenario is bad pizza. Putting too much trust in business accounting tips you find online can have much more severe consequences. We would know: We’ve heard from many clients who have tried (and failed) to Google their way out of accounting problems. There are a lot of reasons why this just won’t work.
Business Accounting Tips
If you’ve spent much time searching for business accounting tips, you may notice that they tend to repeat the same few basic pieces of wisdom. Most of these tips fall into one of three general categories of advice.
- Accuracy is everything. Obviously, having accurate numbers for payroll, income, expenses and so on is critically important for all businesses. You probably already have systems and processes in place to make sure you’re only recording accurate information. Accounting software has made a lot of this easier by automating data collection and tracking.
- Keep meticulous records. No business owner needs to be told the importance of being diligent around documentation. Plenty of strong businesses have been driven into bankruptcy by tax and legal issues caused by sloppy record keeping. For bookkeeping and compliance reasons, every business should have comprehensive records that are organized and easily searchable.
- Review your financials routinely and carefully. Oversight is essential for spotting errors, identifying trends, preventing fraud and staying on track to meet your business’s financial goals. Some accounting tips tell business owners to review their records quarterly; others suggest reviewing financials as frequently as every week or even at the close of business each day.
These are all examples of general business accounting best practices. We certainly don’t dispute the importance of keeping and reviewing accurate, comprehensive records… but we also suspect most of our clients already know these things are important. What they may not know is how to take the specific actions that will help them meet their accounting goals. That’s not something you can find in a list of the top 10 business accounting tips.
The Problem with Business Accounting Tips
Ultimately, the tips you find online are just suggestions. They may help you avoid making certain mistakes. Maybe you’ll even find tips that help you think about an element of business accounting that you’ve been neglecting.
But by design, they’re general. The same tips can likely apply to businesses across all industries and in all locations. What works for your business won’t necessarily work for another business, and vice versa. Your tax situation significantly affects how you approach accounting. As do things like industry regulations, the way you classify your workers, whether you have investors, your state’s tax laws—and so on.
For example, take record keeping. You know the importance of maintaining accurate and comprehensive records. But what, exactly, should your business be keeping—and what can you get rid of? You wouldn’t destroy tax forms or payroll records, but how long should you hold onto things like employee reimbursement forms, inventory reports and receipts? It’ll depend in part on your industry and your reporting requirements, so general tips can’t give you a definitive answer.
There’s another problem with putting too much stock in general business accounting tips: It doesn’t necessarily make sense for you to implement new accounting processes on your own, especially if they’re inefficient. Maybe you read a tip that says you should be reviewing your financials at the end of every business day, instead of doing a weekly, monthly or quarterly review. That might make sense for some business owners, but your accountant may advise a different schedule that saves you time.
Plus, if you don’t have extensive accounting experience yourself, you may be unable to see the big-picture effects of your decisions. Even doing something that seems relatively straightforward, like transitioning to a new kind of accounting software, may later on cause complications with your tax reporting or bookkeeping processes. Additionally, you may leave yourself open to unnecessary risk resulting in fines and fees that could be avoided if you work with an experienced professional.
Moreover, when we work with a business, we are looking at not only the entire financial picture of the business, but also the business owner. When you own your own business, your personal financial outlook is inherently connected to the business. Accounting is more than just glorified bookkeeping. It can be a powerful tool in helping achieve your business and personal financial goals, and that’s not something you can Google.
Here’s the takeaway: Your business’s financial situation isn’t something you can afford to take risks with, and following free business advice from faceless Internet strangers is definitely risky. Save your Internet sleuthing for low-stakes questions and bring your high-stakes financial questions to someone whose advice you know you can trust. There’s simply no quick and easy substitute for your accountant’s input.
At Sachetta, we take the guesswork out of business accounting. We’re your source for clear answers to complicated questions. Contact me today!
Georgios Liakakis, CPA, MSA, holds a Master’s Degree in Accounting from the University of Massachusetts Lowell. George has been working in public accounting for 7+ years with two different firms ranging in sizes from local to national. He joined our team in 2016 and focused on both business and individual taxation.