Your books are the backbone of your business. They keep your business in order, tell the story of your profits and losses, predict your cashflow, and help you develop strategic plans for the future.
Your books are an internal guide for your business, keeping it out of trouble and moving toward greater profitability and success.
But with mismanagement, your books can quickly turn on your business.
Bad Books Are Bad for Business
Incomplete, inaccurate, and insecure bookkeeping can steer your business off in the wrong direction and lead to serious consequences. Bad books can:
- Misinform and misrepresent your financial situation
- Lead to major cash flow problems
- Create opportunities for fraud
- Open the door for security failures and hacking events
- Trigger red flags and problems with the IRS
Too many businesses are just a few wrong calculations from having their bookkeeping bring their business to a grinding halt.
Make sure your business doesn’t fall into this trap.
Here are three ways to ensure your books are protected from fraud, mismanagement, and compliance problems.
#1) Never have only one person managing your books.
One of the biggest bookkeeping mistakes that small business owners make is putting their books in the hands of only one person. One single bookkeeping source can lead to a variety of problems.
A solo bookkeeper can:
- Get sick or quit leaving you with no one who knows how to manage your books.
- Incorrectly manage your books locking you into poor systems that inaccurately represent the state of your business.
- Make repeat errors that no one catches for months or even years.
- Commit fraud and steal money from your organization without anyone noticing.
While it’s understandable that many small businesses have small teams which may include only one solo bookkeeper, it’s essential to have multiple eyes on your books. In the best-case scenario, a single bookkeeper might be able to keep perfect books, but they can still get sick or need time away, leaving you with no other internal resources. In the worst-case scenario, a single bookkeeper can be a bad actor who takes advantage of the situation and steals money.
Your books are too important to be the responsibility of just one person. Businesses of all sizes need multiple sets of eyes on their bookkeeping.
Related: 6 Bookkeeping Red Flags You Can’t Afford to Ignore
#2) Move your books to the cloud.
A challenge for many established small businesses is continually modernizing bookkeeping systems and software. For businesses that once used paper-based bookkeeping systems, it can be a challenge to move to digital record-keeping. It can be another hurdle to upgrade digital systems as they become outdated.
But transitioning from paper and outdated systems is an investment that is worth it.
Having reliable, cloud-based software not only modernizes your business, it protects it. Paper-based or outdated digital accounting systems leave your business open to a variety of potential problems.
- Data Security Concerns: You risk data loss due to hardware failure, theft, or improper backups.
- Limited Access: You can’t view books unless you’re in the office or on the same computer.
- Harder to Scale: Dated, manual processes can’t keep up with growth or complexity.
- More Manual Work: Modern systems help you save time by offering automatic transaction imports, invoice reminders, etc.
- Limited Visibility: Paper books are more difficult to review while cloud-based software offers encrypted backups, user permissions, and audit trails.
Updating your bookkeeping and accounting software may feel like a heavy lift at the time, but your business will reap rewards thanks to your efforts. And, it’s not as difficult as it sounds. See why CFO2U always recommends QuickBooks Online to our clients.
#3) Review up-to-date financial reports once a month.
The best way to ensure your bookkeeping is staying on the right track is to review your financial reports every month. Monthly reports help you catch errors early, stay aware of your financial position, and identify trends or issues before they spiral out of control.
Every month, your bookkeeping team should provide you with a profit and loss statement, balance sheet, cash flow statement, and accounts receivable and payable reports.
If your bookkeeper can’t provide these reports on a monthly basis, that’s a red flag. If you’re not reviewing them, you’re missing a critical opportunity to catch issues early and optimize performance. Reviewing these reports helps you:
- Spot unusual activity or discrepancies
- Track progress toward financial goals
- Maintain clean books that are accurate and ready for tax reporting
- Make proactive, informed business decisions
Your books tell the story of your business, but they can only tell a true story if they are up-to-date and accurate. If you are lagging behind and failing to get reports on time, it could make your business vulnerable to a variety of problems.
Related: The 10 Tax Mistakes You Don’t Want Your Small Business to Make
So, What If You Aren’t Doing These Things?
Bookkeeping isn’t just record-keeping. It’s a vital part of your company’s health, strategy, and security.
If you aren’t following the three best practices outlined in this guide, it’s time to make a change.
CFO2U is here to help you protect your business and prevent fraud, compliance violations, and financial setbacks. Our team offers monthly bookkeeping support specifically designed for small businesses.
- Modernize your bookkeeping and accounting systems and software
- Get more oversight into your finances
- Receive detailed monthly financial reporting
- Ensure all monthly income and expenses are tracked
- Stay compliant for employee payroll processing and tax obligations
- Get monthly bank and credit card reconciliations
- Receive expert support and guidance to inform your financial strategies and systems
Our team ensures that you have a solid and secure system for your bookkeeping that protects your business — and our plans start at just $300/month.
For as little as $300/month, you can have the peace of mind that your books are accurate, secure, and setting your business up for success. Your books are too important to overlook or undervalue. Make sure you give them the attention they deserve.
Learn more about how CFO2U can support your small business.
Explore our monthly bookkeeping packages or schedule a free discovery call with our team to build your custom monthly plan.
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