In this post you’ll learn:
- If your lack of financial knowledge is endangering your business
- How to delegate financial tasks while limiting risk
- What you should be doing weekly, quarterly and annually
He almost didn’t review his tax return that year.
Busy season, million things going on, and his CPA had always been reliable. Why bother going through a stack of documents line by line when you’re paying someone good money to handle it?
But something told him to take a look. And buried in the paperwork, he found a $115,000 error.
His CPA had made a mistake. Not malicious. Just a mixup. But it would have cost him six figures if he hadn’t caught it himself.
This story comes from a store owner I know. And it’s not unusual. I’ve been running businesses and watching entrepreneurs behind the scenes for over 15 years. The ones who blow up financially almost always have one thing in common.
They outsourced their finances and mentally checked out. Not the work. The ownership.
Big difference.
You Can Delegate the Work But Not the Responsibility
Financial Commandment #1: Your money, your responsibility.
You can hire a bookkeeper, a CPA, a CFO. You can bring on business partners to handle financial details. You should delegate the work wherever possible.
But you cannot delegate responsibility.
The moment you stop understanding what your financial team is doing, you’re exposed. Not because they’re bad people. Because everyone makes mistakes, and no one cares about your money as much as you do.
I learned this the hard way. Last month I found my bookkeeper had misclassified some revenue, inflating our paper profits by about 20%. Not malicious. Just a mistake. But I would have paid real taxes on fake profits if I hadn’t caught it during my monthly review.
And I’m not immune on the personal side either. Just this week I paid my property taxes a month late. Pulled up the county website and saw a big red DELINQUENT staring back at me. Not because I didn’t have the money. I just got busy.
The point isn’t that you need to be perfect. The point is that no one else is going to catch these things for you.
What This Looks Like When It Goes Wrong
The $115K tax error isn’t an isolated incident. Here are a few other real situations I’ve seen over the years:
A business partner secretly stopped paying taxes without telling his co-founder. The debt became a shared liability. Years of cleanup followed.
One owner had 58% of his daily Shopify revenue going to an ill-advised merchant cash advance. Every single day. More than half his sales were gone before he could touch them. It nearly sank the company.
A bookkeeper misclassified earnings, inflating paper profits by 20%, potentially incurring real and undeserved taxes for the owner.
None of these were malicious. All of them were preventable with basic spot-checking.
Where Trust Goes Wrong
Let me walk through the specific areas where I’ve seen trust break down.
Bookkeepers make mistakes quasi-regularly. Even the decent ones. eCom accounting is complicated, especially with inventory. You have to review your monthly financials in depth, not just skim the top line. If something looks even slightly off, dig in.
CPAs mess up too. I find errors on my taxes about half the time I review them. Going through tax documents is painful. It’s one of the worst ways to spend an afternoon. Do it anyway.
Business partners can hide things, even partners you trust. You need clear visibility into bank accounts, owner’s draws, tax filings, and credit card spend. I’ve seen partners hide the real performance of the business, run up debts, and stop paying taxes without telling their co-founder.
CFOs, if you have one, should be leaned on for their expertise. But make sure you actually understand what they’re telling you and run it through your own brain. Their philosophy may not align with yours, and bad advice happens even with people who have years of experience.
Bank access is where I’m most paranoid. The longer you can avoid giving someone carte blanche check-signing or wire authority, the better. I use Mercury for all my business banking partly because of their granular permissions. Team members can spend up to a threshold with automatic notices to me. It lets me delegate without giving away the keys.
The Spot-Check System
You don’t need to micromanage. You need to verify. Here’s what I recommend:
First and foremost, make sure you have a working knowledge of your business finances. You should feel comfortable with your P&L, balance sheet, statement of cash flow, and doing a basic cashflow forecast. If you’re not there yet, the book Financial Intelligence for Entrepreneurs comes highly recommended as a primer.
Monthly, review your financials in depth. Not just the bottom line. Spend enough time going through them line by line to spot things that seem off. This is where I caught the 20% misclassification in my own books.
Quarterly, compare a few account balances to your actual bank and credit card statements. It’s overkill to do this constantly, but it’s a nice sanity check. At a minimum, make sure the balances on your balance sheet roughly match what you know is in the bank.
Annually, scan your tax returns line by line before signing. Is it a massive pain? Yes. But I usually find at least a few small errors, and sometimes material ones. Like a $115,000 one.
A few hours total per year. It can save you six figures. Or your business.
Rate Yourself
Here’s a gut-check for you. Rate yourself 1-10 on how well you understand your business finances right now.
1 means you’ve outsourced everything and don’t really know what’s going on. 10 means you’re a KPMG auditor ready for duty.
You should be at an 8.5 or higher.
If you’re not there, find the area where you’ve been trusting someone blindly the longest. Do a spot-check this week. Build a system to do it quarterly.
Your money. Your responsibility. No one else’s.
Ready for More?
This post is the first in an eight-part series on financial mastery for store owners and entrepreneurs.
Interested in following along? Or in regular insights from the 1,000+ 7- and 8-figure owners inside the eComFuel community? If so, let’s stay in touch.
