Accounting and Bookkeeping classes

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Billy Pilgrim
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Accounting and Bookkeeping classes

Post by Billy Pilgrim » Thu Jul 22, 2010 9:32 pm

I was reading an article about a business owner who who went through a rough patch with his business. The main problem was that his books were a mess and even though he hired an accountant, it was still pretty bad.

He made a comment that he should have at least taken a class in accounting or bookkeeping.

I know a lot of successful business people who have never taken a class in accounting or bookkeeping. Is it really necessary to take these classes or is it best to wing it and learn on the job?

ncaraway
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Post by ncaraway » Thu Jul 22, 2010 10:05 pm

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Raybo
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Post by Raybo » Fri Jul 23, 2010 9:22 am

Most business people consider accounting one of the bothersome things best hired out. This is a big mistake.

Tracking where your money comes from and goes is the vital statistic of any business. Without organized bookkeeping or an understanding of how the books are maintained, an owner can't answer such questions as

- What are my highest profit offerings?

- Who are my most profitable customers?

- Is my advertising working?

- Am I spending too much/little on a service/product

and a whole lot more.

Without understanding your accounts, it is very difficult to create budgets. Without budgets, it is easy to run out of money or to overspend on something.

Without a thorough grounding in accounting, a business owner is managing by gut feel which isn't always right or often isn't prudent.

Ray
No matter how long the hill, if you keep pedaling you'll eventually get up to the top.

TWG
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Post by TWG » Fri Jul 23, 2010 10:38 am

Ray is dead on. Especially in a small business, accounting could and should be done by the owner. Accounting is not tricky and there is software out on the market that can be had for cheap that can assist with all aspects of accounting. People seem to like Intuit.

TWG

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Frugal Al
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Post by Frugal Al » Fri Jul 23, 2010 10:58 am

There are certainly a lot of successful business owners who pick up their bookkeeping skills along the way, and if they enjoy it and have an aptitude for bookkeeping that's great. Most small business owners' time can be better utilitized in figuring out how to increase sales and improve other business efficiencies. Accounting, on the other hand, should not be learned OTJ, but you need to understand it. If the business is being purchased and has significant assets it's important to get a KNOWLEDGEABLE accountant before the purchase, as sometimes the purchase price allocation to goodwill, licenses, or other intangibles will be a negotiation point, since it will effect cash flow via depreciation schedules.

One cannot overstate the importance of timely tax and business document filings (i.e., sales taxes, personal prop taxes, etc.). Many otherwise successful small businesses have been done in when they got behind on their sales tax, and other tax obligations and the myriad of business filings required. Also, one needs to be knowledgeable enough to ask the right questions and ensure your accountant is doing a good job.

Also, try to hire an accountant that has experience in your business. I had to tell my accountant about the tip tax credit I was eligible for when I owned my restaurant. I had to ask my accountant why I shouldn't minimize my salary and take a higher draw. These are things he should have told me about.

I agree with TWG that things like QuickBooks make this task much easier on a daily basis, but it is not generally a replacement for an accountant in anything other than a very small business. Accounting software, however, should make the number of billable accounting hours much fewer. With the proper software, many small business owners only see their accountants a few times a year.

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