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Why Bookkeeping is a Big Deal
Episode 12126th June 2022 • I Hate Numbers: Simplifying Tax and Accounting • I Hate Numbers
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If you're running a business, you need to need to factor in that bookkeeping is big deal. Are you serious about your business and keeping on top of your finances? If your answer is yes, and I hope it is then keep track of your financial transactions.

You may think it’s a daunting task, but it doesn’t have to be that way once you get the hang of it

Why Bookkeeping is a Big Deal

Let’s look at some of the reasons why

  • Firstly, It keeps you organized and in control of your finances;
  • Secondly It helps you make informed decisions about your business.
  • Thirdly It can protect you from mistakes and financial disaster.
  • Furthermore, good bookkeeping practices can help improve your business' bottom line.

So, what are you waiting for? Listen to find out more. I want you to start keeping track of your books today!

Your financial story

Every story needs words. Every story needs a narrative. Your business story is no exception. Except the words to that story. Are your numbers. And what are those numbers come from? They come from the records that you keep what we might call bookkeeping. In this podcast episode,

Like it or not, bookkeeping is important for your business. It's the process of recording and tracking financial transactions over time.

This information can

  • help you make sound business decisions
  • assess your company's financial health
  • plan for your future

If you want more information or would like to subscribe so you never miss an episode, head

Conclusion

So, if you're still with me and haven't hit the unsubscribe button yet, thank you! You are someone who understands that numbers don't have to be scary - in fact, they can tell an amazing story about your business.

Moreover, I hope you can see Why Bookkeeping is a Big Deal.  It's the way to capture those numbers and puts them into a format that makes sense. It's also one of the most important things you can do for your business because it reduces stress and anxiety. And finally, it's crucial to choose the right digital accounting system for your needs.  Digital and Cloud Accounting is the way forward.  Check out my FREE guide 'Release the Power in You' and find out more about the Why, the What, and the How of Digital and Cloud Accounting.

I hope this podcast episode has helped clear some things up for you and given you a better understanding of bookkeeping.

Subscribe now so you don’t miss an episode.  For more business and finance, news, advice and tips, don’t forget to subscribe and watch our weekly videos on I Hate Numbers.

My mission is to inform, inspire and educate you to get closer to your numbers.  You can make more profitssave tax and time, improve your well-being and your money mindset.  There are lots of ways to do this, you’re spoilt for choice,

My book, I Hate Numbers will change your relationship with numbers, in a good way.  Click to find our more.  You can join our Financial Planning Story Community at Numbers Know How.  Planning tools, knowledge learning and development and so much more we are adding.  Click to discover more

Help me to help you and others by subscribing and sharing this episode in your network.  Listen now and subscribe to I Hate Numbers, so I can send it straight to your inbox every week with all the latest updates.

If you found this podcast useful then share this episode on social, leave a review on Apple podcast.  Connect with me on InstagramYouTubeTwitterLinkedIn and Facebook.



This podcast uses the following third-party services for analysis:

Chartable - https://chartable.com/privacy

Transcripts

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Every story needs words. Every story needs a narrative. Your business story is no exception, except the words to that story are your numbers. And where do those numbers come from? They come from the records that you keep. What we might call bookkeeping. In this podcast episode, I'm going to go through bookkeeping, why it's such a big deal, the power of bookkeeping, what it can do for you, the types of systems we should adopt. Should it be paper? Should it be spreadsheets? Or should it be digital? Spoiler alert. For me, paper and spreadsheets have their purpose, but digital is the way to go.

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You're listening to the I Hate Numbers podcast with Mahmood Reza. The I Hate Numbers Podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.

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Hi, folks. Welcome to another weekly episode of I Hate Numbers. This is the podcast that's got a mission to help improve your financial awareness, help you win more battles than you lose for that battle between your ears. Help you and your business make more money, save tax and time. What's not to love about that? Let's crack on with the podcast. Now, bookkeeping is about capturing those moments, capturing those memories, more specifically, your number moments, your financial transactions. You need to keep a track of what's going on in your business. And it's good not only for your health, but also for your wealth.

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An effective bookkeeping system will bring immense satisfaction, power and knowledge. It will tell you which customers are working well, where your money is going. It will also make you accountable and show you the direction that your business needs to follow. Listen to find out more. Now, according to the very wise person Dee Hawk, making good judgments when one has complete data, facts and knowledge isn't leadership, it's actually bookkeeping. Those words sum up the situation very nicely. Now, bookkeeping isn't about having a massive library of business books, but it's a term that we apply to organising all your records that come from your financial transactions.

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So every time you spend money, every time you receive money, all those bits of paper in virtual space or otherwise, those receipts and invoices and statements, bookkeeping brings a sense of order out of the chaos. Whether those documents, whether those receipts are on email, stuffed in your kitchen drawer in paper form, whether they're tucked away in your filing cabinet with all the other A4 documents you can find, you need some way to organise that chaos to give you instant recall. Now, the idea of bookkeeping may not be sexy for some people.

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The thought of that filing, that paperwork, may make you want to gouge your eyes out and go off and watch some paint drying. However, bookkeeping is important for your business and it makes the rest of your business easier. So who wouldn't want that? Now, for many business people, bookkeeping tends to be a once a year activity. Here's a typical outline of what would go on. Firstly, a business person would gather up all their bits of paper, any records they've got, whether they're scrawled on the back of envelopes, whether they're actually kept in their spreadsheets, any records whatsoever.

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They're then taken off to the person they rely on to do their accounting. It could be their accountant, you may even do it yourself. You send them off to that person that you trust. And then, with the wave of magic accountant’s wand, that paperwork is transformed into something. It's transformed into a set of accounts, it's transformed into your tax return. And from that, you'll know what has happened historically and what you've got to pay, or if you're really lucky, what you might get back. We can but dream. However, there are lots of other reasons why bookkeeping should be taken more seriously than it actually is at the moment.

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And we need to do this on a regular basis. And regular doesn't mean just once a year. An effective bookkeeping system will bring you immense satisfaction, power and knowledge. It will tell you, amongst other things, which customers are working well for you, where your money is going. It's going to make you accountable and it will show you the direction that your business needs to follow. If you want to do things like planning, which I think is a big must, if you want to reduce the anxiety, have some idea the decisions you make, what the impact will be, you need fundamentally good records.

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You need to know the profits you're making and the money you may be literally losing. Because, unfortunately, folks, that does happen as well. Those records are going to be the radar that focuses on where the issues are and where the challenges lie. Of course, whilst bookkeeping is more than useful to us as business owners, is also a tick box for compliance. We keep our friends, the regulators, whether it's the tax office, the company regulator, happy. Those regulators may wish to have a nose or dive deep into your business. And the tax office in the UK, HMRC, IRS in the United States, different names, different regulatory bodies, will have the right to have a further look at your records if they so wish.

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It's actually a statutory requirement and we don't want people going to prison, do we? Now, those records are a great start. And it's not just for doing your annual accounts exercise once a year. If you're registered for sales taxes, if you're registered for VAT, those records are an essential part of the mix that you need to have to support the information that goes into those returns. Now, fundamentally, bookkeeping is one business task that you should not and cannot evade. Your financial transactions are factual. They're going to show you what you spend, what you bring in, literally the ins and outs of what's going on in your business.

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And it's not just a question of making a record, making a note, tucking them away. You have in there amongst those records, the power and the confidence and the ability both to navigate and tell your business story in words as well as numbers. Another wise man coming into the mix, Amit Kalantri said, in business, people with expertise, experience, and evidence will make more profitable decisions than people with instinct, intuition and imagination. Let that sink in for a moment. You can only grow a business if you've got the expertise, the experience and evidence garnered from the foundations of what's actually going on.

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So let's recap where we are so far, folks. We've talked about what bookkeeping is. It's not a tedious exercise that's there to make you lose the will to live. It's an absolute necessity. It brings order out of chaos. It tells you what you're spending, where your money's going on, what's making you money, what's losing you money. It helps you make those decisions that relate to the future. All the clients that I look after when they ask me questions about how to save tax, putting a financial plan together, what happens if this situation occurs? I can only answer that in the general unless I've got some numbers that I can hang on to and I can interrogate and look at.

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That's where bookkeeping comes in. The last thing I want to look at is how should I go about developing a bookkeeping system? Should it be paper? Should it be on spreadsheets? Or should it be digital? Now, paper has a lot of benefits going to it. It's simple, it's straightforward, but it also lacks a lot. What it lacks is the ability to interrogate, the ability to extract. You can. It's better than nothing, certainly. But for me, for a business, whatever the size is, paper records can be very limited. You don't want to be spilling your cup of coffee or your food over your paper records. Once they're damaged, that's it.

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Now, spreadsheets have their purpose. They're very good. They're very good for interrogation, they're very good for noting. But the time and the energy spent on developing a spreadsheet that's going to not only record your business transactions, but for us to be able to extract data, extract information, becomes very cumbersome. Human beings have been known to make mistakes. And if your business is powered by spreadsheets, then you are creating a potential problem for yourself. The way to go is, in my experience, in my opinion, which I'm going to reinforce, is the cloud. Digital is the way to go.

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Now, for those of you who may not be familiar with the world of cloud accounting, digital accounting, then check the show notes at the end. And I've got a link to a wonderful free guide called Release the Power in You. It will talk you through the whole merits of cloud accounting what to do to convert, how to prepare yourself, all the merits and the drawbacks involved in cloud accounting. Now, cloud accounting is a brilliant way to automate, streamline your processes. Time is money, and cloud accounting will save you that money if you organise it correctly.

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It recalls with ease and panache all the financial transactions that will go on in your business. Not only that, it will connect to things like websites, your bank, CRM, your spreadsheets. It does all the power lifting, automates those processes and save an immense amount of time, which frees you up to work on other activities in your business. Your phone also acts up as your supercomputer and it acts as the link to your cloud system. The cost of these cloud accounting these days is less than a cup of coffee. And with that, that power, that investment, you will take your business forward. Are there any other merits of cloud and digital accounting? They certainly are.

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Not only do you avoid the some might call it tedious data entry, you can do it from your phone, it's fuss free. When you get a receipt or something similar, don't worry about putting it into your filing cabinet, into your drawers, your glove compartment. You can take a snap and you can upload it and store it and you can throw the piece of paper away. You've got access to live information as long as your records are up to date. You know right here and now what's going on in your business. You can look at it in terms of what profit you're making now, by product, by group, overall. You can use it to compare where you are in your financial plan. To me, it's a great way to take your business forward, to reduce the anxiety and give you more certainty to what your future holds for you.

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To make it a live document, to make it useful, you need to monitor that expectation against reality. And that's where your records come into it. You can set things up on a dashboard, see what's more important to you. Tag your favourite customers, your larger customers, check your bank account without becoming too obsessive. Sounds pretty cool, doesn't it? Folks, let me round up with what we've got. Bookkeeping. Do not look at it as a task of tedium. Do not look at it as an unnecessary task. You cannot move your business forward. You cannot grow, and all businesses have to grow. If you stand still, you'll be going backwards.

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If you want to grow, if you want to have more than a hobby for the business that you take seriously, if you want to make decisions backed by fact, backed by numbers as opposed to intuition and a flip of a coin, if you want to have impact and make those decisions with some degree of clarity and certainty, you need a bookkeeping system. Ideally, you need a bookkeeping system that's powered in the cloud. I hope you found this podcast useful, folks. I'd love it if you give me some feedback and comment. Obviously subscribe to the station. And even better, if you found you've got some value, share with those who like it and share a comment. If you have to pick one, add a comment, say something nice, give me some feedback. And until next week, folks, happy bookkeeping.

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We hope you enjoyed this episode and appreciate you taking the time to listen to the show. We hope you got some value. If you did, then we'd love it if you shared the episode. We look forward to you joining us next week for another I Hate Numbers episode.

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