Why small businesses need two different kinds of accounting systems

And why accounting firm owners need to help their clients with both...

Let me share with you right now. I am NOT an accountant. However, after working with thousands of them I can tell you, some accounting firms know how to help their clients properly and some do not.

Your accountant will typically run your accounts using the Accrual or Cash method - which relies on a profit and loss statement. This tells you revenues, costs and expenses during a specified period.

However this profit and loss statement does not share the entire picture for the business owner.

The business owner is often led to believe there might be more money available to them, than there actually is.

Many business owners look at a profit and loss statement and think that the money left over belongs to them, but this could not be more untrue. When you run a business a large proportion of the money belongs to the taxman.

I have seen people get into huge debt, owing HMRC money, taking too much money out as a directors loan, paying themselves too much, not having enough money to them pay VAT, corporation tax or personal tax. It often ends up a complete mess and leaves a very unhealthy bank balance.

The irony is that some accountants run their accounts systems in the same way, and do not have a grip on their own financials.

This is why all businesses (including accountants) need two kinds of accounting systems.

1. The traditional money in, money out - profit and loss.

2. The PROFIT FIRST system.

The Profit First System is the system that stops all the above mistakes being made and enables you to have a very healthy business and a stress-free life.

Profit First isn’t about what the official accounts say. It’s about what money is in your bank and who it belongs to. The great thing about the Profit First System is that YOU, the business owner, get to take your income first and get paid to work in and run your business.

We have run the Profit First System in our business for the past 5 years. This methodology got us through the Corona Pandemic and it will get us through the Recession that is coming our way. We have cash in the bank, we pay ourselves well, we make payroll on time (and have 6 months' payroll in the bank) and we have a bank account with growing profit month on month that we can take as a cheeky bonus every quarter.

The sad news is that we did not find the Profit First System via our accountant. It was via the marketing that the Profit First company was carrying out online. So whilst our accountant sees us running this system, he cannot take the credit for our exceptionally healthy business.

I am not qualified to teach you the Profit First System myself, but I highly recommend you find an accountant that is, the number of firms that are becoming Profit First qualified here in the UK is rising, and there are many firms in the USA that have been through the Profit First training and can help my American entrepreneur friends.

If you are an accountant or bookkeeper reading this then learning the Profit First System is something I highly recommend if you want to be seen as VITAL to your clients and prospects. Moreover, the system works so well that the businesses you work with will thrive when they implement it.

The Profit First System works hand in hand with the traditional accounting system. It is not there to replace traditional accounting, it is there to enhance the small business owner's life and help them run their finances in an easy and rewarding way.

At Oompf.Global we show you the exact branding and marketing strategies needed for you to turn your accounting/business advisory services into a unique VITAL product that you effortlessly market and sell for 5 figures

We help accounting firms go from overlooked commodities to “VITAL” assets – differentiated positioning, productised offer, unique brand, happy clients and founders with freedom.

If you would like to delve deeper into our content here are a few ways you can do that.

1. Watch our 28-minute free training on 3 ways to differentiate your accounting firm. Check it out here: https://oompf.global/decommoditized

2. Watch an overview of the power of UPLEVEL software by clicking through here: https://uplevelbyoompf.com/

3. Read about our flagship programme Momentum by clicking through here: https://oompf.global/momentum/