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Do You Hate Bookkeeping?
But it would be good to :
know your cash position and know the bank balance before the statement arrives Have reports and guidance on your profitability? You want to be able to explain where your figures come from to the tax man if he should ask. Would you play football, cricket or golf and not bother to keep the score? Of course not, we all want to be in control of our businesses, but for the small business owner this has never been easy.
Give serious thought to 'outsourcing' your bookkeeping to an expert, either an online bookkeeping service or a traditional bookkeeper.
Isn't it best if my spouse does the bookkeeping?
In many small businesses the owners spouse will keep the books. Of course, they want to help each other, and to keep costs to a minimum. However, this can sometimes be a bad move.
If they are competent and enjoy doing it - then good. But remember your business is your livelihood, it is important that the books are written up on a timely and accurate basis.
If the job is done by someone competent
A Accounting costs should be minimised, good books = an easier job
B You should be provided with useful information throughout the year. Such as:
The balance on your current account, taking into account cheques you have written which the bank don't yet know about.
Your profit for the month, compared to the same month last year.
or Profit for the year to date, compared to the same period last year.
An aged debtors list.
The cost of paying someone competent to provide this information, perhaps just a few hours each month, can be a very rewarding investment.
Will buying Sage or Quickbooks or similar solve my bookkeeping problems?
Firstly, these and the other similar packages are marvelous tools for small business owners. However the purchase of the tool does not implement the system. If you are going to use the system 'in house' make sure you set off on the right track. Get someone experienced to help set up the 'chart of accounts' and the opening balances. Make sure you are confident on making entries and reconciling the bank account.
Be aware of the saying "rubbish in, rubbish out", bad books means more work at the year end. At the extreme, your accountant may have to cast the books aside, and re-write the whole years figures - expensive.
We don't really need to reconcile the bank?
"Reconciling the bank" just means making sure that the books are in agreement with the bank statements. The bank rarely make mistakes, so it usually means making sure you haven't missed anything in the bookkeeping.
And YES it absolutely has to be done. If you don't do it, your figures won't be reliable, and your accountant will have to do it, and he/she will charge for it.
What 'accounts' do we need in our 'chart of accounts'?
The software normally sets up the essential balance sheet accounts, such as a bank current account, a VAT account and debtors and creditors. Often it is necessary to add a bank savings or second account. Also a cash account might need to be set up. If it isn't clear how to do this, just set up a new bank account, and call it 'cash'.
The profit and loss accounts can be tailored to your business. Don't have too many accounts, 20 to 30 is usually enough, 50 or more is probably too many.
Bev Davies has twenty years experience in bookkeeping and providing advice to small businesses. Bev runs the website http://www.book-keeping.org.uk which provides information on bookkeeping and payroll to small business owners and to bookkeepers.