LNC Bookkeeping 101 – You have to know your numbers. Whether you like it or not, this is necessary for your business. Do you hate looking at your bank statements? You’re in business to make money, so why don’t you know your numbers? You’re not alone.
Money is a huge stress point for many LNCs because they get confused over the bookkeeping aspect of their business. However, the only way to plan your business and earn your wealth is to know and understand your financial statements. Avoiding your bank statements will not make your financial problems disappear.
Tip #1: Choose a Bookkeeping System
You have a choice of handwritten ledgers, computer software, or hiring a bookkeeper. Unless you have a degree in Accounting, handwritten ledgers can become confusing and difficult to update if you fall behind, so I recommend researching the multitude of bookkeeping software available.
If you want to hire someone, take your time to plan an interview process and check references, even if you hire a local firm that will assign someone to handle your records.
Tip #2: Do Your Bookkeeping regularly
If you’re not ready to hire a bookkeeper, choose one day a week or twice a month to log your invoices and receipts. Keep everything you spend and receive accurate in your bookkeeping. Don’t wait until two months before the tax deadline to take out a shoebox of receipts and start entering them.
Also, reconcile your bookkeeping records with your bank statements monthly. Keeping a regular bookkeeping schedule also diminishes the chances of duplicate entries or entries being logged into multiple or wrong accounts. All this wreaks havoc at tax time so do it right from the start.
Invoice when you reach the end of a stage of a case.
- For example, you’ve read records and written a report. Invoice.
- You review depositions and write a rebuttal report. Invoice.
- You get documents produced by discover. Invoice.
Letting those hours accumulate affects your cash flow.
Tip #3: Know the Jargon
Whether you’re using software or a bookkeeper, knowing what the different accounting terms mean will further your understanding of your business’ profitability. Know the difference between Accounts Receivable and Accounts Payable. Know the difference between Employee and Independent Contractor means a world of difference in calculating Payroll Taxes.
Tip #4: Make Detailed Notes
For every transaction entered into your books, add a detailed note—no more guessing games at tax time. Enter the reason for the expense, person or company, etc. Also, avoid using acronyms in the notes. While it makes sense to you now, it may look like a foreign language in the future or to a new bookkeeper or employee.
Tip #5: Keep Personal Expenses and Business Accounts Separate
This may seem like common sense, but I can’t say it enough. If you use PayPal for your business payments, do not pay personal expenses with that same account. The same is true if you have a business checking account at your local bank. Don’t use that account to pay your gas bill. Of course, have a business credit card AND an LNC business card.
Knowledge is Power
The more you know about your financials, the more power you have to fix any problems and steer toward more earnings. Your business was built to be profitable. Embrace the bookkeeping practice so you can better understand your profit margin and run your LNC business more smoothly.
The more you “know your numbers”, the more in control you will be of your business. You can make intelligent, informed decisions when you hire an accountant.
Order How to Manage Your LNC Business here.
Pat Iyer MSN RN LNCC is no fan of numbers, but peacefully coexists with them.
Pat Iyer is president of The Pat Iyer Group, which develops resources to assist LNCs in obtaining more clients, making more money, and achieving their business goals and dreams.
Pat’s related websites include the continuing education provided on LNCEU.com, the podcasts broadcast at podcast.legalnursebusiness.com, and writing tips supplied at patiyer.com.
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