Small Business Growing Too Fast? Accounting and Bookkeeping Problems to Watch

Your business is growing, but your systems aren’t keeping up. Our favorite Bookkeeping Mensch, Paul Rosenblum, is seeing this everywhere, and let’s just say he’s not popping champagne about it. 

He’s watching clients add more LLCs, more accounts, more moving parts, but not more structure, and somehow he’s the one who gets to sort it all out later. That’s where the problems sneak in. Books fall behind, decisions get harder, and small issues quietly turn into expensive ones. He walks through what this actually looks like behind the scenes, and why growth without systems puts pressure on everything underneath, especially the humans trying to keep it all running. But he also shares what it looks like when a client gets it right, and why that makes his bookkeeping heart very, very happy.

Transcript

Season 8 Episode 3

It’s April! Tax season is almost over! When I was younger, I’d say --  “May I have another”?  But now, I say – “Oh, boy, I got through another one”.  And since it’s April, let’s reflect on this past tax season and even the last few years and how my practice has changed.  Welcome to the officially reviewed “The (Not Boring) Boring Small Business Bookkeeping and Accounting Podcast”.  Check the link in the notes to the article that was posted at the end of Feb.  I’m Paul Rosenblum. 

In the past few years, I’ve seen a trend in clients’ businesses and attitudes of some tax preparers. Some of these changes can be explained by tax preparers getting older and being more stressed during tax season since they haven’t understood the fact that they are older and can’t handle the amount of work that they handled several years ago.  Some of it can be explained with new tax laws that their tax software has to keep up with and different options of doing things in putting together a tax return. And of course, their personal lives all getting jumbled in a mish-mosh of emotion, stress, and what is happening in the world today.  

But let’s talk about how clients have changed (at least for me), and how businesses have changed in my practice.  In the last 4 years or so, many clients have expanded their businesses from one LLC to 3 LLC’s. Others have moved from a corporation to a new LLC. Others have been behind in their tax filings, and they want their taxes filed and the bookkeeping to be up to date, but they don’t have the funds to pay taxes -- hence they have to be put on payment plans with the IRS, and they don’t have enough cash flow to pay their bookkeeper or their tax preparer. 

I have been trying to reach a client for the last 6 months at least to find out where they stand with their business.  No response. I finally hear from them about a week ago.  I had not started 2025 with their LLC yet since I haven’t heard from them.  The client said that it wasn’t a problem, they are already on extension.  Then, I have had access to a second QuickBooks online company for the same client, but they have been doing their own bookkeeping.  Not in 2025, they tell me. So far, that’s 2 LLC’s that right after-tax season, I have to do a year of bookkeeping for.   I thought that was why they called me.   (NOOOO!!) 

They called me to tell me that they have 2 NEW companies! They have been in existence since 2024, and no taxes have been filed for either of their corporations yet.  They have been doing the bookkeeping, and they wanted to give me access to both of the companies.  I took a look at them, and not to my surprise, no bank account had been reconciled, so I will have to go through everything and probably have to fix several mistakes, reconcile the accounts, and fix the chart of accounts, which at first glance needs lots of work.  1 LLC has now grown to an LLC, 2 corporations, and one sole proprietorship, all doing different things.  And they all seem to be profitable, but since I just got access to them, I’ll have take a better look when things are reconciled and done right. 

You might think that’s a good thing (and I would too, if I were 30 years old, or maybe 40, or maybe even 50).  But I’m now officially 71. I’m trying to cut down, but I feel like I’m stuck with this.  I’m stuck because I like the client, and there is something in me that can’t say no to small businesses that I can handle.  But it also means that I will have to walk away from others to be able to handle these 4 companies. 1 LLC, 1 sole prop and 2 corporations.

Another way that clients have changed is the slower pace that they pay me for my services. When they want their bookkeeping done, they bother me every 2 days but it now takes months to pay me when it’s done.  For years, I never had a collection problem at all --- it was the last thing on my mind. Now, I really have to keep an eye on things in my Accounts Receivable. 

I have also seen where clients want less and less to do with the process of bookkeeping -- they just want it done. They are hard to reach; they don’t get back to me with answers to questions that I have, but when their bank wants something from them, they expect me to jump.  I will NOT say ‘How High’?  I will hardly react anymore.  

I have also seen an increase in clients who never look at their books, even though I send them the profit and loss and balance sheets at least quarterly, if not once per month.  I have a client who is looking to merge his business with another or possibly sell it outright.  So, I started going over the balance sheet with a fine-tooth comb. I have asked him questions for several years that I have never gotten the answer to.  There were loans on the books that his company has made to another company, that he admits now to me that it’ll never be paid. And that was from 5 years ago. There were loans on the books from 2025 that I never received the paperwork for so I don’t know how much interest is involved. There are payments to the SBA for the EIDL loan that were probably all interest, but I never received a login or a report so that I could get that information.  It was booked as principle in 2023, but if it was really interest, a tax return would need to be amended.  There has been little communication from the client, and we do the best we can.  The client signs the tax return -- You know the old saying - you can lead a horse to water but can’t make them drink. 

It’s interesting to me that people are creating more companies, getting more locations set up, expanding payrolls, but have less communication with their bookkeeper. 

In my case, there is one particular tax preparer who will go through the books very carefully, and, as I mentioned in the last episode ‘yelled’ at me in capital letters in his tax portal that the client can log into and see --  about a paper check that I entered in as a sale after I emailed the client more than once to ask what that paper check was.  I did look it up on the bank’s website, but no graphic of the check showed up there.  I didn’t want to leave it in the ‘Ask the Client’ account, since this particular tax preparer would ‘yell at me’ for doing that too.  So, I put it in sales. 

  It ended up being a refund from the IRS with interest and principle separated.  How do I know that now?   Because the tax preparer in his ‘rant’ told me what the exact figures on this check represented.  Why did he wait until 2 days before the deadline to file to let me know?  Because he’s as stressed and angry at everything as so many people are these days and the added stress of not dealing with getting older.  Try some Tai Chi, or Yoga, or maybe some Valium?  Chill. Doing a perfect tax return doesn’t change the world or even make the client happy. Clients just ‘want it done’. Tax preparers work for the client, get paid by the client (in theory, anyway), and do not work directly for the IRS.

But I do have good news.  And I hope this client listens to this episode.  I have one client who is the director of a medical facility. She and I work pretty closely together, and we are providing almost perfect books to the CPA who they just started with this year.  It’s a complicated set of books including payroll, a simple IRA plan for employees, subcontractors, two different locations, lots of assets (but the CPA wants many of these to be put in as Minimus expenses), and the director is very picky about the names used on the chart of accounts.  I’m not complaining one bit.  Never.  This is the kind of bookkeeping that I want to do. This is the kind of client that I want. Is it more work?  Sure.  But I don’t care one bit.  To be this clean, I need communication from the client, and I need to work with a client who cares.  She cares. I also do the bookkeeping for her own company that she shares with her husband.  Those books are clean too, because there is communication between us. This is the way it should be. I will be doing their bookkeeping from my death bed, as long as I can sit up, see the screen and type. Well, maybe I won’t, but it’s a fantasy, anyway 😊  

But just a thought --  what if --- A.I. really does take over eventually?  What happens to the communication between the client and the bookkeeper?   It goes away – it goes away totally.  That’s what happens. 

Let’s go back to the accounts receivable problem that I talked about earlier. One of the things about online software is that if the client starts their own subscription to the software, and hires a bookkeeper and gives them access to the books, then the reality is this:   Why should they pay me in a reasonable time? I do the work, wait to get paid, do more work, and they can run their own reports by just logging in. And if I don’t get paid, the only recourse that I have is to sue them in small claims court if I have a contract with them.  This is why I use the desktop version of QuickBooks as much as possible.  I create the file with my license, it lives on my computer, and if I am not paid, at least I have some leverage by withholding their file. I don’t have much of an accounts receivable problem, but more than I used to have.  

If clients are having a cash flow problem, and know that they really can’t afford a bookkeeper or an expensive CPA or accountant, then why are we even being hired?  People are hiring good tax preparers who charge accordingly and then not paying them for their (our)accounting or  bookkeeping services.  

So, I’m trying to figure out how to move forward.  I’m considering walking away from the 5 clients that I share with this one specific tax preparer who ‘yells’ at me in capital letters so without working more hours, I can concentrate on the clients who are expanding. As I have said before, I reflect on how many years that I have been a bookkeeper and how I rely on a pretty regimented schedule going to the office every day but realizing now that I can’t work the hours that I used to. 

 I have been cutting down hours, but if I keep cutting down hours and clients, it also means that I would be making less money. Yes, I could take on more clients and then oversee others. I tried that, and that’s not really what I want to do.  As prices go up, social security might get cut in the next few years, I think some days, that I just shouldn’t cut down at the present time.  I go back and forth these days depending on how I feel when I first get up in the morning. 

The good news is that I recently have been asked to teach some QuickBooks Online classes for a NYC non-profit organization which now has a requirement to teach QuickBooks online through webinars. And I have also been asked to do some classes on balance sheets and profit and loss reports in webinars for another non-profit, both getting paid. So, every time I start to cut down, old clients are surprising me with new companies for me to do the bookkeeping for, new clients are asking for me to do webinars for them that I’ve done for others, and even new webinars that I have to create new PowerPoint presentations for.  I know that I would not do well in retirement (just not built for that), but the universe must know that too.

 And of course, this podcast.  This has become the center of my work world. (Just ask my producer, Steph.)  And if I don’t say it enough here, thanks for listening.  It’s really very much appreciated.  

Next episode, I’ll be talking about EBITDA.  What is it and how does it work?  That’s next time.

And don’t forget, send me your questions, suggestions or comments to Bookkeepermensch@gmail.  Have a good end to your tax season ---  and business owners – get back to business as usual, but keep in touch with your bookkeeper and tax preparer! 

I’m Paul Rosenblum