It's Better to Be Safe Than Sorry, but...
It’s best to be Accurate
Some bookkeepers approach Sole Proprietorships as if they were corporations.
This is a mistake.
Why? It results in the wrong kind of bookkeeping approach.
Specifically, your bookkeeper ends up doing TOO MUCH.
Which means they will charge you too much.
And they will restrict you too much, in the name of unnecessary compliance.
Imagine you hurt your ankle.
The doctor takes x-rays, confirms it’s sprained and not broken, and then says:
“We’re going to put a cast on your ankle, as if it were broken.”
“A cast??” you protest. “But then I won’t be able to walk without crutches… I thought casts were for setting broken bones?”
“They are,” says the doctor. “But it’s better to be safe than sorry.”
Many accountants and bookkeepers do this to Sole Proprietors, in a different form:
They treat your Sole Prop like it’s a corporation.
When you ask “Is that all totally necessary for me? Just as a Sole Proprietor?” — they might say something like: “Strictly speaking, no… but it can’t hurt.”
It can’t hurt?…
We aren’t talking about bullet proof glass here. This is a small business. It’s highly fragile — you’ve sunk resources and time into it. And statistically, most businesses like yours FAIL.
So whenever I hear “It’s better to be safe than sorry,” I tend to think:
It’s actually better to be precise about what’s best, and then do it.
Other accountants and bookkeepers really struggle with this.
That’s because most of them learned bookkeeping through apprenticing with others, and it’s simply easier for them to do what they’ve always been doing.
Here’s another issue…
Your bookkeeper and accountant are likely keeping all their clients’ books in the same way, even though your business is different and has less requirements.
Which means they will prescribe the most rigid compliance needs to ALL of their clients — including those who don’t need it (i.e., Sole Props like you).
In other words:
They put casts on your legs, slow you down, and possibly cause your business to fail.
But they will tell you that it can’t hurt.
A final thing to keep in mind…
Your accountant makes most of their money on more complex clients, so your specific needs are less visible to them.
The reality is, they expend more work but earn less money if they focus on your Sole Proprietorship instead of their bigger, more corporate clients.
It’s like taking your sprained ankle to a doctor who really only makes their money from putting casts on people.
And look — now you’re wearing a cast, too!
Well… that’s because it’s the most efficient way for HIM to treat every patient.
And not because it’s what you need.
If you want to get exactly what you need and only what you need for your Sole Prop, schedule a free consult with us at Everything Every Week!
