I was recently interviewed by Enoch Sears of “The Business of Architecture”
During that interview we covered 7 Bookkeeping Tips for Architects, but in reality much of it applies to any small business owner. Enoch posted a video of the interview covering 6 of the 7, and I thought it would be useful to discuss them here as well as provide you with the link to watch the video on 6 Bookkeeping Tips for Architects over on Enoch’s blog.
This is how you run your small business as well as if it were a publicly traded company
The first tip is specific to Architects. After wrestling around with QuickBooks on how to handle the phases, I have settled in on classes as the best option. The main reason is that when it comes to billing you can invoice several classes on a single invoice. Of course the best solution is to use a product that was built for architects like BQE Core.
The second tip is to get comfortable with the reporting system of your accounting software. You spend money on bookkeeping so that you can get valuable information out of the system. This is precisely where the reports come in. If you have a good working knowledge of the reporting area of your accounting system then you can pull reports, analyze your business and make decisions based on that. Of course you should also consult your bookkeeping and / or accounting professional for help understanding the reports, especially if something doesn’t make sense to you.
The third tip comes right on the heels of the second. You should have a working knowledge of how your business runs from the numbers, even if you have a bookkeeper. This will help you understand if your bookkeeper is doing their job well. Otherwise you have no idea. It will also help you do a lot more on your own which will save you money and free up your bookkeeper to focus on the things that you don’t need to concern yourself with.
The fourth tip is based on architects who are using QuickBooks. You should learn how items work – particularly 2-sided items. This will give you access to much better job cost reporting which is critically important for architects who want to understand how well you are bidding jobs. In other words, you want to understand how profitable your current jobs are so you can get better at bidding future jobs that are similar.
The fifth tip is for everyone. Set aside one day per month to review your books. Now you’ll consolidate everything mentioned above into a monthly review process that will give you incredible insight into how your company is performing financially. Of course the financial performance is based on the results of operations. So everything ties in here.
The sixth tip is about how to go about tip # 5. Review the Balance Sheet first. Look at every account, and drill in to see what’s inside. Is it complete (all there)? Is it accurate (the right valuation)? Did it happen (eg for accounts receivable did the work being billed for get done)? Do this for every account on the Balance Sheet AND the Profit and Loss. You will have a tremendous understanding of what the books are saying about the financial position and health of your company when you complete this process.
The seventh tip is to consider moving your accounting and everything else into the cloud. There are all kinds of arguments for this. The convenience, and the time you’ll save by not having to worry about backups and file conversions and sending them to your accountant and so on will prove to save you much more than what you’ll spend in the applications themselves.
I hope this gives you a few things to think about and better yet, some action items to follow up on. As always, please post your questions and comments below.