(Me & Dan Platta Blue Skies CEO)
I have spent years building up my business, and I have made plenty of mistakes along the way. One of those mistakes was trying to do all of my bookkeeping on my own. I used to spend days trying to record all of my transactions and balance my business expenses, and at the end of all my hard work, it was still a mess.
After trying it myself and giving my statements to my tax accountant, they basically had to scrap it and do it themselves. That cost me hundreds of dollars and wasted a lot of my time, and it was fairly embarrassing. So the next year I got a bookkeeper to do all of that hard work for me, and when I turned it in to my accountant the following year, they were super impressed with the quality of the work, and it helped me out a ton throughout the year.
If you only have a few things going in and out of your business account, you can probably do your books yourself. Although as your business starts to grow, there are more and more things that go in and out of your business and it can get hard to keep up with it all.
If you are in the service industry, your skill is probably doing that service. I doubt that you also have a degree in finance, so why waste hours of your time when you can hire someone else to do it for an affordable price?
So a bookkeeper is obviously going to balance your checkbook, but what else do they do? Well, they can also give you detailed profit and loss (P&L) statements at the end of every month. This is going to tell you exactly where your money is going, where it's coming from, and how much you made after everyone was paid.
These numbers are essential to running a successful business. If you are just running your business without a real idea of your margins or without knowing where a lot of your money goes, you should not expect that business to take off anytime soon.
Putting together these kinds of reports takes a lot of time and attention for a random small business owner on a spreadsheet. Although bookkeeping companies have dedicated professionals with specially made software that can make them way easier and this is the one expense in your company that will actually make you money in the long run.
One of those numbers on your profit and loss statement is going to be your COGS, or cost of goods sold. Now I know what you are thinking “I am a service business, I don’t even have goods to sell”. That doesn't matter, COGS is a broad term for the amount of money it takes for you to make money, AKA do a job.
You can think of COGS as everything you have to pay for to get a job done. This includes things like labor, fuel (for trucks and equipment), supplies(one-time use, and reusable tools over time), insurance and damages, and even merchant processing for credit cards.
Without a COGS report, you are going to struggle to know exactly how much it costs you to do a particular job and therefore are not going to be able to quote it correctly to a client. Sure, you can make up an estimate in your head and you may be close, but knowing that it costs you exactly $178.50 to do a particular job lets you price it out so much more accurately, and it will make you more money in the long run.
Knowing how much money your business is profiting is invaluable. Without a solid P&L statement, it can be tough to look at a bank account and tell exactly how much you made, spent, and profited. Plus, a P&L statement can help you figure out if there is something wrong with your business too, or if you spent more than usual in a particular category that month.
Not to mention, it is extremely useful to have a P&L statement for the year come tax season. Taxes are unnecessarily complicated, but if you can give a quality P&L statement to your tax accountant, they can finish your return quickly. Plus, if you did not hire a bookkeeper throughout the year, you would likely have to pay your tax accountant more at the end of the year to tidy everything up.
All and all, I have to say that hiring a bookkeeping agency is one of the best decisions for my business that I have made in a very long time. You will make more money in the long run by knowing exactly what it costs to do business, and by knowing exactly what is happening in your business at the end of every month.
If you are looking for a bookkeeping agency yourself, I use Blue Skies. I have multiple videos up on my youtube channel with Blue Skies CEO Dan Platta. He is an incredibly smart guy that knows his stuff. After having a few conversations with him, I knew they were the company for me and my fans. So if you need a bookkeeper, visit Blue Skies at my special link for a major discount, and a top-tier bookkeeping agency.