Your forte is consulting, not accounting. But according to Denise Neamon, a partner at Gaines Kriner Elliott LLP, if you’re just starting up your business, then creating and maintaining thorough accounting records is essential to your future success.
Even if you’re the best consultant in your field, you can’t get your business off the ground if you can’t, or don’t have time, to manage questions like these:
• How will you keep track of what clients owe you?
• How will you invoice them?
• How will you keep track of what you owe vendors?
• How will you cut checks to them?
• Where will you record your business expenses?
• How will you reconcile bank statements to ensure transactions are accurate?
• How will you monitor cash flow?
And that’s not all you need to worry about.
On a macro level, keeping good records becomes even more important when you consider that they enable you to analyze profitability, remain in compliance, protect your business from liabilities, and maintain good relationships with clients and service providers.
If you’re just starting out, whether as a sole proprietor or single member LLC, Neamon advises to find an accounting software package that’s right for you. “About 85% of my clients are on QuickBooks,” she says. “But many of the rest use a different option of a software package, something that’s more specific to their industry.”
Regardless of which one you choose, Neamon advises to go electronic, not manual. If you simply have a checkbook and a spreadsheet, it’s going to make doing business and keeping track of your records harder, she warns. Clients and vendors alike want everything to be electronic; and from an accounting efficiency standpoint, keeping electronic records makes more sense.
Setting up such a system can be a little painful. There are a lot of questions to answer and ground to cover at first. That’s why Neamon recommends working with an accountant who can train you on using your accounting software – so you’re able to leverage all its capabilities.
But once the system is in place, managing your records will become much easier – and your new consulting business will benefit tremendously in the long run.