Merging Essential Business Skills and Professional Bookkeeping Services

If you are asking what business skills and bookkeeping services have to do with each other, then you are asking a great question that I would love to answer.

Many years ago during an intense conversation with one of my mentors she advised me to always remember that there is only one constant; and that constant is that everything around us are changing.  



That is so true. You just have to think of all the changes to the tax code every year to realize why I, as an Enrolled Agent and bookkeeper, providing Tax and bookkeeping services in Santa Rosa and the nearby cities of Windsor, Rohnert Park, Sebastopol, Sonoma, and Petaluma, regard continuous learning as one of the most critical business skills for business owners and business professionals. Can you imagine using the bookkeeping services of a bookkeeper in Santa Rosa who are not up to date with all the latest deductions you and/or your business can claim…?

One of the websites I frequently visit to learn more is Inc.com and this week I saw an infographic that captured my attention. The infographic by Graham Winfrey listed the 10 most important business skills for 2020 as identified by the Top Ten Online Colleges.

This got me to sit down and think what I regard as essential business skills for business owners - from my experience of working with them over the last 20 years. And, though I came up with a lengthy list, for today’s blog I want to narrow it down to three areas that I deem critical to business success.

Business Skills and Bookkeeping Services - 3 Critical Business Skills 

1.  Intrinsic or Self-Motivation

About.com defines intrinsic motivation as follows: “Intrinsic motivation refers to behavior that is driven by internal rewards. In other words, the motivation to engage in a behavior arises from within the individual because it is intrinsically rewarding. This contrasts with extrinsic motivation, which involves engaging in a behavior in order to earn external rewards or avoid punishments.”

Dictionary.com refers to intrinsic motivation as follows: “The undertaking of an activity, as a hobby, without external incentive; also, personal satisfaction derived through self-initiated achievement.”

BusinessDictionary.com defines it as follows: “Stimulation that drives an individual to adopt or change a behavior for his or her own internal satisfaction or fulfillment. Intrinsic motivation is usually self-applied, and springs from a direct relationship between the individual and the situation. It is very important factor in the design of a learning or training course.

From the above definitions and my own experience I regard intrinsic motivation as one of the most important skills a business owner or business professional must have. Another way to think of it is: fueling one’s own fire.” As you all know, business is not always easy. There are competitors, technological challenges and changes, new legislation, etc. And, they sometime occur all on the same day…

To cope with all of these circumstances it is critical for a business owner to be self-motivated. To have a clear vision of what you want to achieve is great. To have clear and measurable goals on how to achieve your vision is outstanding. But if you do not have the motivation to achieve your vision and goals, that beautiful vision and great goals are of no value. As they say, this is where the rubber hits the road…

My question to you: Do you motivate yourself to achieve your dreams or do you need someone or something else to motivate you?

2.  Continuous Learning

I have already referred to it above. As business owners and business professionals we must have in-depth knowledge of our professions. We have to be regarded as experts at what we do. In other words we must be able to both “talk-the-talk” and “walk-the-talk.”

As a bookkeeper I realized the value of being regarded as an expert. Not only do I make sure that I read a lot, I also studied further and qualified as an Enrolled Agent. This gives me specialized knowledge regarding taxation and allows me to represent clients in front of the IRS.

Another tool that I use to further my own knowledge and those of my clients is through blogging on my website. Blogging helps me to address the issues and problems that my clients experience on a daily basis. And, every now and then I’ll receive a question that asks of me to dig deeper into an unfamiliar area, thus helping me to broaden my knowledge and increase my value to my clients.

Remember, we all want to work with experts. And, when you are an expert, prospects and clients will come back to learn more as they have now embarked on the journey of “know, like, and trust.”

3.  Well Organized

Although I can talk in length about being organized, Dictionary.com refers to is as follows: "Having a formal organization or structure, especially to coordinate or carry out for widespread activities."

And, though there are many important areas in business to be organized, for me the most critical area is organization through accurate and up-to-date bookkeeping or bookkeeping services rendered by a professional bookkeeper. Keeping track of and properly organizing your business's expenses, income, account receivables, and account payables are essential practices for creating and maintaining a successful business. And, do not forget to add running and interpreting daily, weekly, or monthly financial reports.

Although many small-business owners may prefer to perform their business’s daily and monthly accounting tasks themselves, experience have taught me that it is extremely challenging for business owners to execute successfully on both their business activities and bookkeeping activities.  There are just so much they have to do to manage their companies successfully. When they have to add all the accounting activities to their daily calendar it just doesn’t get done.

Therefore, it is important to look at your bookkeeping and organize it into activities that belong together and may make it easier to keep track of your business expenses, liabilities, and outstanding payments.

 3.1  Organizing Your Bookkeeping Services

Regardless of a businesses size or business activity, it has to keep detailed records of its financial activities as it has to give full record of it every year end. To keep it organized here are a few suggestions.

  1. Your Bookkeeping System

Essentially there are two bookkeeping systems: single-entry and double-entry, which businesses can use:

  • Single-Entry Bookkeeping System:

The single-entry bookkeeping is a simple system more suitable for personal finance. An example is balancing your checkbook. It is regarded as single-entry bookkeeping as it involves a single account (checking) that is being debited and credited.

  • Double-Entry Bookkeeping System

A double-entry bookkeeping system is regarded as more appropriate for business as it tracks two accounts at a time. For example, when you sell a product in a double-entry bookkeeping system it records the transaction as a credit in the cash account, and a debit in the inventory account.

   2.  Professional Bookkeeping Services

It is no secret that most small business owners lack the time, knowledge and experience to keep a detailed set of financial records. Two solutions to consider are:

  • Using bookkeeping software
  • Using the bookkeeping services of a professional bookkeeper.

If your business is fast paced, operationally complex, and dependent on precise and timely financial records, you should definitely consider using outside professional bookkeeping services.

How do you know when to engage the services of a professional bookkeeper? Consider it if the following scenarios are applicable to your business

  • Your business keeps a large or sizable inventory
  • Your employees perform billable work on client sites
  • Sales may exceed $100,000 this year?

If any of these scenarios pertain to your business it may be in your best interest to get professional bookkeeping services as soon as possible.

   3.  Record All Your Financial Activities

Whether you outsource your bookkeeping to a professional bookkeeper or keep it in-house, it is good financial discipline to keep track and record all of your financial activities.

   4.  Understand Your Financial Statements

Again, this is all about keeping it organized. Your bookkeeping software will help you to not only categorize your financial activities, but also make it intelligent, or shall we rather say useable…

Consider the following questions:

  • Do you know how much inventory you purchased last month or over the last quarter?
  • Can you estimate how much business tax you'll pay next quarter?
  • Can you forecast sales?
  • Can you generate a list of non-paying customers?

The answers to the above and other related questions come from categorizing and understanding your financial activities. Now your bookkeeping efforts pays off as it gives you insight into your cash flow and financial management.

Summary

The above skills are from my perspective three of the most important skills business owners must possess. I’m under no illusion that we will all agree on this and therefore I would appreciate your input in sharing with me what other skills you deem important.

Author

Stephanie Horne is an experienced bookkeeper and Enrolled Agent. She is the owner and founder of Horne Financial Services in Rohnert Park, California along with this website and has over 20 years of in person, virtual and outsourced bookkeeping/accounting and tax preparation experience with businesses of all sizes.

Her love and passion is to work individually with business owners and families to help alleviate any financial stress or concerns by helping them to understand and have better control of their income, expenses, cash flow, and tax liabilities.


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