"Making good judgments when one has complete data, facts, and knowledge is not leadership - it's bookkeeping" - Dee Hock
Good bookkeeping habits keep you in the loop for all your business comings and goings. Having meaningful information at the ready for the time when you have to make serious decisions can make or break your business.
It helps you keep yourself accountable to your business plan goals and offers constant feedback as to your progress toward succeeding them. As they say, measurable feedback is vital to the success of any venture.
Accurate bookkeeping also lets you keep a very close eye on cash flow, credit control and invoicing. It gives you the dates when you should be paid, and when you should be paying!
As experienced and professional bookkeepers ourselves, we obviously recommend outsourcing your bookkeeping to a professional. But for smaller company's or start-ups, there is nothing stopping you from doing the books yourself, its a fundamental aspect of business and all business owners should know how it works!
Grab yourself a cup of your favourite hot drink and put on your learning hats as we take a detailed dive into the ins and outs of bookkeeping, and why it is such a important foundation for any business!
Bookkeeping For Dummy's
Bookkeeping - noun
The activity or occupation of keeping records of the financial affairs of a business. "I got in a financial muddle because I didn't keep my bookkeeping up to date"
Bookkeeping is the detailed recording of financial transactions and plays a fundamental role in accounting for businesses of all size. Purchases, invoices, bills, receipts and payments are all tracked in order to provide accurate information to the financial happenings of your business.
If a vision of piles and piles of invoices all jammed into a binder comes to mind, your in the right place. Thankfully with the dawning of modern computing we no longer have to keep physical records as we once did. Filing cabinets are becoming a thing of the past as more and more records move onto USB drives and cloud storage.
Its A Time Sink
Bookkeeping takes time. Depending on the volume of transactions going in and out of your business that time can be as little as three hours a month, or as much as three hours a day! When it comes to bookkeeping, no business is equal.
Doing your own bookkeeping takes hours to learn and hours to do. This is fine if you are new to business and are growing your own organisation from scratch. However, most companies reach a volume of bookkeeping that they simply struggle to keep up with alone, this is where Accountants and Bookkeepers like us come in.
Businesses outsource their bookkeeping to us to save them time and effort. Its a vital service that allows them to focus on the other parts of their business like sales, growth and the day to day management of the business.
As we cleared up above, no business is equal when it comes to bookkeeping. It really does depend on the volume of transactions such as sales, purchases and bills that your business generates.
For example a pub which serves food, drink and events will have daily transactions that could number in the hundreds ranging from drinks and meals sold to ingredients purchased and cleaning materials. Bookkeeping of this volume is pretty much a full time job, even with digital filing and accounting software.
On the other side of the coin lies businesses with very few bookkeeping requirements, such as consultants. A consultant might generate one invoice per week and expenses that are very similar each month. This kind of business will only need a few hours of bookkeeping every month.
Bookkeeping Isn't Optional
Without accurate bookkeeping records your accountant will not be able to prepare your monthly management accounts. This applies to VAT returns and year end Self Assessments too. Businesses who fail to keep their books in order usually struggle elsewhere in business, as the invoices pile up it takes more and more time to work through. Time that could be spent generating new business and offering better customer service.
Delays in bookkeeping lead to delays (and possible fines!) in your tax returns and month end accounts. Leading accountants and bookkeepers to chase business owners for the much needed information month after month, unless a proper bookkeeping procedure is created and followed. Being late with bookkeeping can also add to your accounting costs as it will take longer to prepare year end accounts, and we all know that time is money so the longer it takes to fix those books the more it is likely to cost your business!
We Can Help
We are professional bookkeepers and accountants. We have spent years learning how to manage the finances of our clients so they don't have to. When your bookkeeping starts to stress you out, or becomes a time sink for your business, perhaps its time to outsource to a company like us.