Wyoming Business Tips for Nov. 28-Dec. 4
November 22, 2010 — A weekly look at Wyoming business questions from the Wyoming Small Business Development Center (WSBDC), part of WyomingEntrepreneur.Biz, a collection of business assistance programs at the University of Wyoming.
By Susan Jerke, WSBDC regional director
"I have a great business idea and I think my sister will do my bookkeeping. Is this a wise decision?" Trent, Sundance
Getting a new business off the ground in a highly competitive market will require not only knowledge and skill to produce a product or service, but will need a sound financial footing. Many new business owners are passionate about their product or service, but may dismiss the bookkeeping as effortless or trivial.
Keeping track of financial data requires skills that may or may not be appropriate for a family member or friend, especially if that person does not share the passion of your business. Before delegating the bookkeeping tasks of a company to a friend or relative, the following should be considered:
-- Does the person have the skills and knowledge to support the business' bookkeeping needs and has the understanding of the inner workings of the business. Does the person understand the terminology of the business, how to order products, keep track of inventory and how the owner projects future expenses.
-- Will you be able to communicate the need for accurate and timely financial statements, payroll and quarterly tax preparation for the IRS; and does the person have time to devote to preparing invoices or sending statements on a regular basis.
-- Can you mix business with personal life without causing difficulties within the relationship, and has compensation been discussed about the position.
If the answers are positive, then working with a friend or family member may be good for the company. If you or that person needs some extra help getting started, Wyoming Entrepreneur offers free assistance.
However, another option may actually be more beneficial in the long run. Many businesses make the decision to hire an outside bookkeeping firm. The cost is less expensive than hiring an employee since the owner is only paying for the actual hours that are spent working on the books.
Often, bookkeeping services are flexible and will do part or all of the bookkeeping process, allowing a business owner to do some of the tasks. That leaves the more time consuming or difficult processes to the experts.
Communication and trust are keys to working with any bookkeeper, whether it is in-house or an outside firm. Interview several bookkeepers to find a good fit and make sure you understand the fee structure and expectations. It is important to review reports on a regular, monthly basis. Make sure that taxes and bills are paid on time. When the small business owner has an active part in such a review of financial reports, the company will continue to have current information -- critical for making smart decisions.
Knowing that the company's financial interests are being taken care with quality bookkeeping will ease the way for the owner to focus on strengths to build the business.
A blog version of this article and an opportunity to post comments is available at http://www.wyomingentrepreneur.typepad.com/blog/.
The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, e-mail firstname.lastname@example.org or write 1000 E. University Ave., Dept. 3922, Laramie, Wyo. 82071-3922.