Your Bookkeeping Isn’t Just for Taxes: How Professional Service Firms Can Use Their Numbers to Make More Money
For many professional service firms, bookkeeping has a very specific purpose: keep everything organized enough to file the tax return. Transactions get categorized. Bank accounts get reconciled. Payroll gets recorded. At some point, the accountant receives a set of financial statements and prepares the return. Technically, the books did their job. But if you run a consulting firm, agency, law practice, engineering company, IT services business, recruiting firm, architecture firm, or another professional service business, that is a fairly low standard for financial reporting. You are selling expertise and the capacity of your people. Payroll is often one of your largest costs. A few clients may represent a meaningful share of revenue. One additional hire can add a significant annual commitment before that person produces a dollar of collected revenue. In that kind of business, your bookkeeping should tell you considerably more than what happened last year for tax purposes. It shou...