To laymen and women, this could be daunting – mostly due to the perceived “technicality” involved.
You’ve probably seen accountants and finance gurus not practicing what they’re always quick to preach.
Let’s face it, not all the grammar tutors get it right when it comes to grammar and certainly, not all preachers go to heaven (if recent events are anything to go by).
The truth is the best lessons about money are not taught in school. If you differ with me in this, try Robert T. Kiyosaki who wrote a whole book on that.
But despite having accounting and finance background, I, too, used to be a victim of this. So, really, it’s got little to do with your class knowledge.
So, why should you start accounting for your money?
Below are the 3 reasons why.
Reason #1. For Recordkeeping:
I can’t ever stress enough the importance of keeping proper records. I know…I know… you’re probably thinking to yourself like – I’ll start keeping records as soon as I kick-start that brilliant business idea I’ve always had.
But hold on.
Have you thought about that loan you may need to start or boost that “brilliant business”?
Or maybe you imagine you have it all figured out because you have your full business capital safely tucked away somewhere in your bank account?
But even with that, you’ll still have other worries – will the tax man knock on my door one day to inquire about my tax returns since I have some money in my bank account?
In short, keeping your records will save you tons of trouble, and trust me when I say, trouble never spares the disorganized.
Reason #2. Reputation and credit-score building:
You know what they say about reputation, right? And if you’re planning to venture or are already in business, then you probably know too well that reputation precedes the bearer. Without proper records, there won’t be any history for you to fall back on; well, at least not with suppliers and lenders.
This is when your credit score kicks in.
In business, reputation is everything. People transact with those they like and trust. With a bad name over your head, you may end up missing out on life opportunities.
Besides, you don’t want to be denied that emergency loan due to a bad name, do you?
Reason #3. Prevention and detection of fraud:
Imagine that “smart” accountant taking advantage of you knowing too well there won’t be a single trace leading back to them simply because you don’t keep track of your financial activities.
Frauds can only be prevented if, and only if, proper records are kept.
I have witnessed countless businesses with enormous growth potentials crumble to the ground for lack of proper record-keeping. You don’t want to go down that road, it can be quite unforgiving.
As stated earlier, the three tips above don’t just apply to businesses but individuals too. If you make it a habit, accounting could surprisingly be fun.
Want my honest advice, start your accounting rehearsals today with the little resources in your possession. You don’t have to wait until you’re in charge of a whole company or department to start holding yourself accountable.
Well, there you have it!
I have always believed knowledge to be power and I certainly hope you feel empowered by this post.
If you have any comments, feel free to shoot and I’ll be more than happy to respond to them.
Until then, let’s keep accounting.