Basic Accounting

My wonderful friend, Sally Massagee, who is a CPA and I recently began periodic meetings to discuss our businesses and to support each other with business growth. Our first meeting was wonderful and we both came away with some great ideas for moving forward. I am definitely not an accounting person and so our very different viewpoints made for an interesting discussion.

I have a bookkeeper that handles most of the tasks related to financial record keeping for me. She inputs my receipts, expenses and income into QuickBooks. Every coach needs to have a system for logging income and expenses and I believe QuickBooks to be the best. Aside from a bit of complicated setup, the software is so simple I can use it myself if I have to! But CPA Sally was not content with what I already had in place. She wanted - no - she insisted, that I start reviewing my financial statements with her each month. Because I am the coach who works with other coaches to be better business owners, it’s a little embarrassing to admit to her and to you, I had no idea what those financial reports meant.

Sally was not put off by this confession at all. She says, “Your financial statements are trying to talk to you. They have many pleasant things to tell you in their own little voices”. She pledged to teach me to understand their language. The most important financial statements to review each month are the balance sheet and the profit and loss statement. The balance sheet tells you about your assets, liabilities and equity for the designated period of time. The profit and loss statement tells you how you did overall in making money during that period. I had to agree that sounded important.

If you don’t have an accounting system set up yet, you need to get one as soon as you can. You aren’t really a business without one. If you have your system in place, I challenge y Read more