Small Business Bookkeeping Nightmares Need Not Exist Today

Bob Babcock Cloud Accounting Leave a Comment

I was in court today for a family matter. My case wasn’t called for 3 hours, so I just sat and listened. I love court, I really do. I also love Diners, Drive-ins and Dives on Food Network, but I’m a marketer, so I run Modernize My Business instead. While my love of law and food and of course marketing, are my focus in life, I am also a partner in, the online video training service for bookkeepers, accountants, business owners and students.

Anyhow, while in court today, I listened to a case where a local locksmith and his ex-wife discussed their matter. The Department of Child Support Services’ attorney was hounding him for a better explanation of his personal vs. business expenses. He spoke of mileage as his method for expensing his fuel and van charges. The DCSS attorney wanted nothing to do with that. She wanted to know dollars spent on the repairs, fuel and maintenance. She also asked him if he had invoices for all his customers. His response, “mostly, a few pay in cash and I get cash tips.” The judge stopped him and said, “Do you report those cash payments and tips to the IRS?” He responded, under oath, “um, no, I didn’t think I had to, most of them are tips.” The courtroom gallery chuckled.

This guy is a hard working guy and appears to be a good father. He drives 45 minutes each way to work every day and back to be with his son. He showed up to court in a t-shirt and Vans, but he knows his stuff, I’ve used his services before, although I’m pretty sure he asked me to pay him in cash. I didn’t tip him and I didn’t get an invoice. This is a small business bookkeeping nightmare.

The issue here is that he really has no idea about his financial position and has never run a Profit and Loss statement and probably doesn’t even know what it means. He runs his business by the seat of his pants. His comment about “I know how much I make by the checks I deposit in the bank each day and that is what I use to file my taxes” made it clear of his knowledge of accounting. I imagine that this practice goes on regularly with small business owners.

When I launched my first business in 1995, I was this guy. I did however keep good record of all transactions in Quicken and kept an Excel spreadsheet of the stuff that didn’t fit there. It worked, for a while. Eventually I built a CRM in Microsoft Access that managed proposals, invoices and payments. It eventually became my business to provide this solution to others.

Unlike me, this guy has limited tech skills and even less ability when it comes to managing his books. However, there is a huge difference from what was available in 1995 vs. today, 2014. We have QuickBooks Online, Freshbooks and Xero, all of which have mobile apps that allow us to invoice and accept payments, even credit cards with a Square or PayPal reader, right on our mobile device. I wanted to interrupt him in the midst of his testimony and say, “Dude, you have an iPhone in your pocket. For a whopping $19 or so per month, you can solve this problem and spend more time fixing locks and caring for your son.” But I didn’t, instead I was compelled to share his story with you.

There’s just no excuse today for this. It’s easy to setup, the card readers are generally free and everyone has a mobile device and most have a computer. If you want to make your next court appearance a pleasant experience, get on it!

Leave a Reply