No doubt that as a small business owner you will want to know the headline figures but you may also have to do the bulk of the bookkeeping to keep costs down.
“How hard can bookkeeping be? I’ll just do it myself.”
This isn't an unusual thought for some small business owners but the reality can be quite different. Bookkeeping is not something you can simply pick up and do without any knowledge or planning but it can be made easier.
While doing it yourself may draw your attention away from core business, in the beginning it may be necessary so let’s look at 5 steps to make your bookkeeping easier.
1. Educate yourself
Learning the basics of bookkeeping, knowing your balance sheet from your P&L, understanding the differences between profit and cash or knowing how to account for assets, taxes and other costs could help you avoid some potentially expensive and reputation damaging pitfalls.
Investing some time in thorough research or attending a basic course could save you money in the long run.
If you want to do it yourself it will take time to learn but it needs to be done right.
2. Select the right system
Once you've grasped enough to feel comfortable you should choose the right system to help organise your accounting and produce some useful reporting that you can use to help run the rest of the business.
One basic option is a spreadsheet, the main benefit of this is that it’s likely to be free but will probably take more time to maintain, opens the possibility of formula errors, often provides less useful reports from which to make decisions.
Dedicated accounting systems are typically the way to go. There are many to choose from and the benefits of each should be weighed against one another.
The main decision is whether to buy an out of the box software that will be installed on your computer/server or to utilise one of the number of growing cloud-based solutions. The latter is usually available on a subscription and can be accessible at any time and from anywhere.
Each cloud accounting system has different features; however, continuing developments have meant that they can save you time, make mistakes less likely, provide valuable reports and help to manage your creditors and debtors. The use of cloud software is on an upward trend and adoption is forecast to continue in future years.
3. Put a process in place
Once you have the knowledge and you have chosen a system you need to put a standard process in place and stick to it. It will minimise the chance of errors if you ensure that transactions are processed consistently.
Within the process include standard reports that you would find useful to run the business, determine standard formats for sales invoices as well as customer communication plans when working to recover overdue debts.
It goes without saying (although I will say it) that business and personal expenses should be kept completely separately. Ensure that you keep all accounting documentation, receipts, invoices etc. so that they can be input into the system. Some cloud accounting systems will allow you to attach a digital image to each transaction making later review easier.
4. Keep up to date
Running your own books requires a reasonable time commitment. You will need to keep up to date with the processing of all accounting documents but you will also need to keep up to date with changes in certain regulations.
You should aim to process transactions regularly but how often should this be? This really depends on what you want to achieve and on how many transactions you have but it should be regular enough that you are always aware at any given time how much money is in the bank, how much is due to come in and how much you need to pay out. Sometimes this will mean processing throughout the day, every day or sometimes less frequently. It should never be less than once a week for any business.
5. Ask for support
If you do all of the bookkeeping yourself there’s no easy solution, it will require some hard work, time and effort.
If you want to spend your time concentrating on your business or you find that you’re growing and simply can’t dedicate enough time to maintaining your accounts or that your focus is being taken away from your core business then you should look to a professional provider for assistance.
At Sanay we can support your business by taking part or all of the process of your accounting and bookkeeping leaving you more time to concentrate on growing your business. Asking a dedicated provider for assistance is a positive step in managing your accounts; you can grow your business without experiencing the growth in number of accounting transactions. You can simply provide the documents and the specialist provider will take care of the rest, they can manage the whole process, provide informative reports and ensure all deadlines are met without you having to worry about it. You accounts will be updated in real time and available to view 24 hours a day, 7 days a week, 365 days a year in the cloud.
Do you want to learn more about outsourcing your finance function to facilitate growth in your business? Schedule a free consultation today!