Have you been neglecting your bookkeeping? Do you avoid your books because the thought of checking the numbers scares you?
Well you are not alone. Most business owners decide to handle the bookkeeping and accounting themselves so that they can always be involved in the day to day handling of their business. Unfortunately more often than not, their bookkeeping turns out to be much more than they wagered for and they don’t know what to do about it. So what now? Get a bookkeeper. Seriously, whether you want to take care of your books yourself or have a trusted employee handle it, a bookkeeper or a client bookkeeping solutions firm can help.
A bookkeeper can help you figure out the best bookkeeping and accounting system for your business. He can set it up for you and teach you how to use it. Once you have figured out how to work it, you can turn to your bookkeeper only when you need help. Plus you have someone to ensure that your books are up-to-date and accurate. Maintaining accurate books is important for business.
Most business owners don’t know where to start when it comes to bookkeeping. A client bookkeeping solutions will be able to help you get started and figure things out like tracking invoices, taxes etc. And besides let’s face it, despite all your best intentions you don’t have the time to devote to your books. Your business needs your complete attention. In your hurry to keep your books updated, you may get things wrong thereby compromising accuracy which can be damaging in the long run. It is in your best interests to let the professionals take care of things. A client bookkeeping solutions firm will be able to give your books and accounts the attention it deserves and ensure that it is always up-to-date and accurate. All this will leave you to focus on your business and let it flourish; isn’t that what you would like?
Bookkeeping is probably one of the most important, yet most ignored, aspects of most businesses, whether big or small. This is quite possibly because bookkeeping is annoying and tedious. Most small business owners, and even big ones, find it difficult to decipher their books, especially after a long day of managing their daily business activities.
So why is it so important to keep track of your books? Simply because it will let you know how your business is performing, give you all the information you need to make business related decisions and most importantly, give you what you require to survive in the cutthroat world of business and make profits. Bookkeeping for small business is not a herculean task; all that you need is some discipline and patience. Ready to get started; here is what you need to do.
- Prepare a Ledger- A ledger is nothing but a record of the current balance in all your business accounts. Your ledger can be accounting software or the old hardbound ledger; it doesn’t matter.
- Enter Details of All Financial Transactions in the Ledger- Get hold of all the source documents for your business transactions and enter the details in your ledger. Make sure you identify which details are relevant before noting them down. Payments usually list the payee, date, category and the check number if a check is used. One of the first rules of proper bookkeeping is that you retain records of all business transactions for at least 6 years. This includes paper or electronic receipts, expense and sales details, payroll information and tax data.
- Note Revenue Data- Enter details of all money received by the business, except investments and loans, which should be tracked separately. Make sure you enter all relevant details of the payment like payee, date, amount etc .
- Accounts Receivable- Prepare a detailed schedule of expected incoming payments which is referred to as Accounts Receivable or AR. This will help you track payments that you are supposed to receive and follow up on them, thereby making sure that you get what is due to you. A common problem that small business owners face is that they often forget to either send out invoices or to follow up on them. Maintaining a ledger will help you to streamline this process.
- Accounts Payable- Another important part of bookkeeping for small business is keeping track of the payments that you have to make. Prepare a schedule of all future payments anticipated by your business, like rent, payroll, tax etc.; this is called Accounts Payable or AP. This will help you make payments on time and keep track of your business’ finances.
- Reconciling Ledgers with Bank Accounts- This is probably the most crucial part of bookkeeping; making sure that your ledger and bank account are in sync. This process is easy if you are using a software as most accounting software are built to link with your bank accounts and download the data; however if you are taking the old paper route, things can be a bit more complicated. Reconciling is normally a monthly task, but most accounting software are programmed to perform this weekly and sometimes even daily.
Now that we have established what you need to do, the next question is can you do it. Bookkeeping for small business by itself is not that bad, however time constraints and other operational priorities can mean that things don’t go the way you intend them to. If that’s true for you or if you feel bookkeeping is not your cup of tea, hire a professional bookkeeper. A professional bookkeeper can record all your expense and income details, prepare monthly financial reports and work with your accountants to prepare annual financial statements and file tax returns. There are numerous options available for you; don’t lose out all the good proper bookkeeping can do for your business.
When we started this company, like all other business owners, our main goal was to grow our business; the sky is the limit after all. Along the way we realised that bookkeeping was relegated to being a mundane task that one did when he had the time. Often it was a catch up that became a priority when it was time to calculate taxes. For small business owners growing the business took precedence and the owner often didn’t stop to hear what the numbers were
telling him- were his payments coming on time, did some account heads guzzle more than required, what was his customer demographics, what is the cost of acquiring and servicing a client, did the pricing consider the cost of overheads and inflation etc. All of these are important questions to navigate the business for which bookkeeping held the answers.
The world of bookkeeping, like every other service, is undergoing a sea change in the way its being done in the Internet era. If outsourcing was driven by its cost advantage, cloud computing is now leading the charge. Yes, everything’s gotten cheaper and initial investments are no longer capital intensive.
It’s all about getting the right service for your business-something that can show you how your business is faring every day against the backdrop of the past and the pattern of trending. Business data at your fingertips for better informed decisions; it’s no longer about just the books. It’s technology that makes bookkeeping work for you. Customising reports, apps that can help you work on the go, business performance data you can receive at preset intervals and more. It’s no longer the prerogative of the large corporations, even a small business can have these perks at much lesser costs than keeping your books the traditional way. It needs someone who understands bookkeeping and technology with the experience of having run businesses. It needs an expert pretty much like a tax specialist who knows the tax rules, how it applies to the company and what’s best for it or a doctor who recognizes the symptoms, knows pharmacology and based in the history of the patient knows what will work. With technology it’s not just plain old book keeping; it’s getting the right advice on technology and setting up the books to show you how your business is faring real time. A bookkeeping specialist not just for books but in technology and running businesses- an expert.
Like everything that undergoing a change there are a lot of questions that arises out of the lack of familiarity. Is the information secure on the cloud? How is an online service better? How can I get key data like cash flow, profitability etc without trawling through data? How do I get my bookkeeper to become my business advisor while saving on his salary? A lot of questions that begs answers. Some thought a blog would be a good idea to voice and share concern, find reassurance in the experience of others and to cope with challenges in transforming bookkeeping from a passive function to active advisory services. How did other business make this radical changes? How did other owners go from struggling to keep their books to read data off it while saving costs and making more time for themselves. After all there is nothing like real life experiences. This is the place to share, seek and find the strength to make the change; after all, change is the only constant.