In a recent podcast, Kara Gibson Brzytwa, owner and managing partner of Exit Equity, sat down with Erin Pohan, owner of Upkeeping, to discuss the crucial role of clean bookkeeping in business success. As experts in their respective fields of business sales and accounting, Kara and Erin shared valuable insights for business owners at all stages, whether its a start-up, a business growing through acquisition, or a business ready to find a new owner through a company sale.

Key Takeaways for Business Owners

For New Business Owners:

Separate Business and Personal Finances: Open a dedicated business bank account to keep transactions clear and organized.

Track Ordinary and Necessary Expenses: Ensure all business-related transactions are properly recorded.

For Established Business Owners:

Regular Financial Review: Don’t just “set and forget” your accounting processes. Understand the story your financial transactions are telling.

Monthly Transaction Recording: Review and categorize all transactions at least once a month while details are fresh in your mind.

Reconcile Your Books: Compare your records with bank and credit card statements to catch any discrepancies or missing entries.

Professional Oversight: Consider working with a 3rd party bookkeeper or accountant for accountability and expert insights.

Why Clean Books Matter

Erin emphasized the importance of maintaining clean, up-to-date financial records:

Loan Applications: Banks and lenders will request profit and loss statements and balance sheets when considering loan applications.

Business Sales: Potential buyers will want to see clear, consistent financial records.

Capital Acquisition: Clean books inspire confidence in investors and partners.

Tax Deductions: Proper record-keeping ensures you don’t miss out on valuable tax deductions.

Real-World Example

Erin shared a recent experience where her team caught a $20,000 erroneous charge from an old vendor during a routine review. This highlights the value of having a second set of eyes on your finances.

Getting Back on Track

If your books have become disorganized over time, consider a “catch-up cleanup project” with a professional. This process involves:

  • Creating a report of issues found in your records
  • Making necessary changes with your approval
  • Potentially setting up ongoing support to maintain accuracy

Final Thoughts

Both Kara and Erin stressed that clean bookkeeping is not just about compliance – it’s about understanding your business’s financial story and being prepared for future opportunities. Whether you’re just starting out or have been in business for years, investing time and resources into proper financial management will pay dividends in the long run.
For more information or assistance with your business’s financial management, visit ExitEquity.com or Upkeeping.co