Should you let your spouse or family member keep your books for your small business?

When a small desktop-computer-typingbusiness owner first starts out they are often looking for ways to reduce expenses to get going.  One of the bigger expenses can be setting up and maintaining your books.  Often times business owners will look to a family member to keep their books for them not realizing the pros and cons that go along with this decision.

I’m sure you’re thinking why wouldn’t I let my spouse do my books, they’re free which is important when there isn’t any income in the business yet and I can trust them because they are working towards the same goals that I am.  But there are some serious concerns to take into consideration before allowing a spouse or family member maintain your bookkeeping for your small business.

Things to consider:

  1. Industry knowledge – Most bookkeepers specialize in a niche and are able to answer industry specific questions. If your spouse or family member has never worked in the industry they may not know some of the issues that can come up and how to handle them appropriately.  Each industry has specific bookkeeping metrics to look at that will help them to make better business decisions.  Having a bookkeeper that is knowledgeable about those metrics will help your business succeed!
  2. Accounting experience – Many family members don’t have any professional accounting experience and this can be a huge barrier to producing a quality set of books each month. This can often cause unnecessary stress as well when they aren’t sure exactly what they are doing.  Using your financial statements to make better business decisions is essential for moving forward with your business.  Be sure to check with your family member and ensure they have a solid understanding of the Generally Accepted Accounting Principles (GAAP) to ensure your books are handled correctly.
  3. Business decisions – Many business decisions are made based on issues identified in your books. A simple data entry error could end up causing your business hundreds or thousands of dollars.  For a new business this could be make or break.  This data entry error could just be from lack of knowledge about how the accounting system works.  Having a professional bookkeeper who knows the ins and outs of the bookkeeping software is important because they will be able to catch these errors easier since they know what they are looking at.

Saving a few dollars in the beginning by hiring a family member may not make the most sense moving forward with your business.  Consider reaching out to a few bookkeepers and learn about their services before deciding on a family member.

For more information do not hesitate to ask.


Tracking Stocks

Just like in business, when trading stocks, you need to track your performance in order to know if your strategy is working.  I had a request to develop a spreadsheet to track stocks. I developed this spreadsheet with the fact that the person had multiple brokerage accounts. Here is a screen shot of the column and there headers. I’ll explain what each column is and what it is for. Stock Spreadshee

The first column is the date the stock was brought. The second column is the stock name or symbol. Followed by the name of the account. In this example, the person has three brokerage accounts. One is their “main” account, one is a self managed IRA account and the last account is an accounting that they have with “Robinhood” (Brokerage App) Filters were added so that they can click the filter and filter by only the account that they need to look at. For example filter for only the taxable accounts.

The “Buy” column is where you enter price that the stock was brought at. The “Share” column is where you enter the number of shares brought. The next column is a calculation of cost. It’s simply the Buy price times the number of shares plus the commission (if any). The buy date can be filtered by year and by month so that you can see what stocks you brought by what time frame.

The next set of column are the Sell Date, Sell Price per share, #Shares and Proceeds. The Proceeds column is the only calculation with the rest of them simple data entry. And just like the buy date the sell date can be filtered by time frame as well. The calculation of the proceeds is just like the Cost. It is the number shares times the sell price plus any commission.

The next column is for any dividends that you received, This will factor into the Profit calculation that we will do at the end.  The adjust column for any miscellaneous adjustments that you may have.

The Profit $ column is a calculation of Proceeds – Cost + Dividends + adjustments. This column gives you the dollar amount of the profit or loss for that particular stock. The last column is the profit or loss % for that stock. It is the Cost divided by the profit or loss $ amount.

If you would like a copy of this spreadsheet feel free to send me an email.