It’s a time-honored business saying with unknown origins: What gets measured gets managed. Though no one knows where it came from, it’s a well-known way of explaining a concept you need to know when you’re running your own company. If you don’t track things, you’ll lose track of them. You’ll lose sight of what you’re doing on a day-to-day basis, and you won’t be managing that business.
Nowhere is that more apparent than in accounting. Here are a couple things to keep in mind regarding your accounting.
Add your ledger entries first
Often people skip out on adding entries to their ledger because they’re missing one piece of information or another. I’ve seen it over and over. They skip entering it when it happens but then they’re up until three in the morning the night before taxes are due trying to hash out just where the money went. Where did that receipt go? No one knows. What account did that come from? Who could tell you?
And most importantly, this sort of last-minute mindset leads to completely missing things.
You need to make sure that doesn’t happen. You could be cutting yourself out of tax benefits at the very least. At most, you could be sinking your company without even knowing it.
Understand what you’re spending and where it’s coming from. Even if those ledger entries are incomplete, add them in. If you don’t, you’re hurting yourself in the long run. It will take you longer to find out what you actually did in the first place than it will to enter it now and fill in a little bit of missing information later.
Track what isn’t categorized
Thanks to our handy accounting software tools, there’s a way to easily track those items that aren’t yet categorized. QuickBooks and other accounting software allows you to add things as “Uncategorized” (or in older versions, “Ask My Accountant.”)
Long term, these uncategorized transactions can be a problem. But short term, they can be really handy. If you don’t know how to categorize an expense or an asset, don’t say, “Oh, I’ll enter it when I know what to put it under.” Get it in there as something uncategorized and figure it out with your accountant later.
Too often business owners just wait to put in those ledger entries until they know all the details. Then they never get done. Avoid this problem. Make sure you enter every expense or asset as it comes in. Your accountant will thank you.