​Why Shoebox bookkeeping is a bad idea

Shoebox bookkeeping is a process of throwing all financial information into a ‘shoebox’ and that at the end of the year this is given to an accountant to record for taxes. All information is thrown in that might be important to the accounting process in a box. Simply dumping the paperwork into a single place and deciding that they will address it at a later date, at which time it will likely be too late to fix problems that might arise.
This includes:

• Sales receipts
• Expense receipts

Knowing the sales you make each month and the cost to run the business to make it a profit is crucial when know if you indeed making a good amount of income. Also it helps to project income and expense with a budget and statement of cash flow.
A good accounting system is critical to getting good financial information. So why don’t people always have one in place for their business? Excuses include:
​

• I don’t understand finance and accounting
• I’m no good at math and accounting means I have to be a whiz with numbers
• To understand accounting I need to learn bookkeeping
• I save money by not paying a bookkeeper
• I don’t know where to find a bookkeeper
• I run my business based on gut feel
• I don’t understand financial statements

 
No, shoebox accounting is not a good way to run the Profit end of your business. This can make it a hassle to finish and time consuming to complete.