The 3 “Mediums” To The “Art” Of Accounting: How To Manage Your Business Accounting With Ease

Not too long ago, I completed a lovely Art class series at Slow River Studio, a local studio in my current hometown. It was a nice expansion from the accounting for small business that usually takes up my day. This experience really helped me get back into my Creative side. (Because believe it or not, accountants DO have creative sides! 😉 )

The funny part is that my creative side has always been with me. In fact, if Art School hadn’t come at such a high price when I was 18, I would have never have become an Accountant.

I always wanted to be an Artist. I dreamt of going to Art School and making Art my life. But when I was 18 and ready to make a move, I was broke. I was practically homeless. And I already had the “starving” part in “starving artist” down. So I bet you can see how at that time, Art School didn’t seem like the next best logical step for me.

So, instead of pursuing that dream, I decided to go to a local community college. Maybe there, I figured, I would discover what I needed to do with my life.

But then, after taking my first accounting class, I was HOOKED. I have made a career of accounting ever since, and have NO regrets!

Now, here’s the cool part. I never truly gave up on art. It always stayed a part of who I am. In fact, as I’ve pursued my passion for art, I’ve actually sold a few pieces of my own creation in my worldly travels.

Art is my center. It’s s a conversation with my soul and it keeps me grounded, and I wouldn’t be without it in my life. But did you know that there is an art to accounting for small business too?

In art you work with different mediums. That is, things like charcoal, oil paints, and watercolors. Now, recently I started considering these mediums. And believe it or not, I found an interesting connection between my passions for both Art and Accounting.

To draw a (vague) parallel, there are actually different types of “mediums” in Accounting for small business, just as there are in Art!

So what mediums are present in the Art of Accounting? They are things like data entry, tax preparation, and CFO services. While all of these mediums are a part of creating an accurate Profit and Loss Statement, each one comes from very different perspective.

Now, let’s take a look at how the 3 mediums in the “art” of accounting.

Medium 1: Data Entry. This is the medium most people use. Maybe you’re DIY-ing your books. Or you’ve hired a Data Entry person like an Administrator or a Bookkeeper.

Data Entry is important, but it’s also one-dimensional. It alone can’t tell you how accurate your books are. It’s a solution only for “checking the boxes.” This means that you can’t use it alone for accurate projections or to predict estimated tax payments.

Why Data Entry is great: It does help you stay organized, and it’s cost-effective (especially if your books aren’t too complicated.)

Where it might cost you: There’s always a tipping point when your books have gone from “no big deal” to “I need help.” Sometimes it is obvious, other times it comes at you quickly and without warning.

The part you need to look out for is verifying your data against receipts, statements and contracts.

For example, what if that 43K loan you took out was inadvertently allocated as income? That’s a data entry error that will mess your numbers up, badly. If you don’t have someone to check your work, your chances of misallocation go through the roof.

P.S. Using something like Quickbooks isn’t an accounting solution, it’s a software. It still needs a lot of human management. (That is, your Data Entry still needs to be accurate and needs to be double-checked!)

Medium 2: Hiring a CPA for Tax Preparation. This is the medium people stay in if they hired a CPA to adjust their books. Most people hire a CPA to check their books periodically, or to file taxes. But usually, that doesn’t translate into much regular in-house bookkeeping.

This option will make your books slightly more accurate. But if your CPA visits only for an occasional bookkeeping check-in or to do your taxes, you’ve only satisfied the bare minimum to stay off the IRS’s radar.

Why this medium great: You know that you’ve got your basic numbers ready and available.

Where it might cost you: You meet the minimum requirements, but you can’t be proactive. You can only be reactive against what’s already happened.

For example, CPAs frequently give estimated tax vouchers when they file prior years taxes. But what if this year your business doubles? Or you make less?

You are already tying up precious cash flow, or not paying enough creating a surprise tax bill. And the data has no continuity. So it’s basically impossible to create accurate projections off of the historical data.

Medium 3: CFO Services. Hiring a CFO will ensure that your data entry is correct. They will allocate your data by owner vision, compliance, and entity type for taxes. (This is what we CFOs call “Tax Mapping”).
BUT, your CFO will also add on the best layer of all: KNOWING YOUR NUMBERS.

CFOs can predict your cash flow. Then we can track profit margins and bottlenecks, and growth progression. From there, we can help you pivot against real time results.

We also layer in coaching services to support both education and emotional healing in your unique journey.

Why having CFO services on your side is great: Its the only proactive solution that can work in real time, and on MANY levels.

Where it might cost you: Working with a CFO requires more involvement in your money journey. It requires that you invest your time, energy, and effort alongside your CFO.

But the cool part is that when you work with a CFO, we ywill increase to help build your wealth, together. Remember, you don’t have to do it alone! Even better, you don’t have to wait until you “feel ready” to get the CFO support your business needs.

So there you have it! The 3 mediums that make up the “art” of accounting for small business.

Which of these three “mediums” do you feel that your business needs the most right now? Leave me a comment and let me know!

Until next time…

Love, light, and MONEY, Honey…

Kaylee