Bookkeeping
Good bookkeeping is at the core of all successful businesses, get it right, and you are setting yourself up for success, get it wrong, and you can expect restless nights filled with uncertainty. Choosing the right bookkeeping service provides a foundation for controlling your business’ finances. In this blog, we will have a look at:
- What is bookkeeping
- The importance of good bookkeeping
- What software should I use to do my bookkeeping
- Should we do it in-house?
- Should I hire a bookkeeper, or can my Accountant help?
What is bookkeeping
Bookkeeping is the practice of recording and tracking the financial transactions of a business. As well as tracking transactions, bookkeeping can also include tasks such as invoicing, paying bills, recording wages, and organising documents in order so that they can easily be accessed as and when required.
Bookkeeping and Accounting are two separate activities; however, there is overlap, and as Accountants, many of our services rely on bookkeeping being completed first.
For further information about bookkeeping and the history behind bookkeeping, have a read of this great blog from Xero.
The importance of a good bookkeeping service
Good bookkeeping is at the core of all successful businesses, but what is good bookkeeping? Good bookkeeping is accurate, timely, and easily understood.
Get the bookkeeping right, and you will:
- Know who you owe money to, and who owes you money at any point in time
- Have the key data recorded, which will allow you to review your businesses performance
- Have real-time, up-to-date information that will allow you to make well-informed business decisions
- Be able to compare your business’s actual performance vs your set goals
- Be able to predict potential Tax Liabilities
- Always have the necessary information required to apply for finance
- Have the bulk of the information to hand if/when you wanted to sell the business
- Feel organised!
Get the bookkeeping wrong, and you will:
- Potentially lose money through losing track of who owes you money
- Potentially lose money through losing track of cash and bank transfers
- Potentially miss out on tax relief
- Potentially get fines from HMRC for failure to keep or preserve records
- Pay higher Accountancy fees
- Have no way of tracking your business performance
- Feel disorganised
What software should I use to do my bookkeeping?
In recent years, bookkeeping software providers have made bookkeeping much easier and less time-consuming. They allow you to keep your records digitally and have simplified processes such as invoicing and collecting money.
There are lots of different bookkeeping software out there. The current main providers are:
All of the above software will provide the same basic functions, however, some of the providers have geared their offering to certain business types. To decide on which software fits your needs, check out this blog by smallbusiness.co.uk. It’s important to note that the bookkeeping software industry is fast-moving, and the software providers are constantly improving and updating their offerings.
It’s also important to note that these bookkeeping software providers’ marketing sometimes can be a bit misleading, suggesting that it’s just a click of a button, if only it was that simple!!
We work with small and medium-sized growing businesses and, after extensive research, chose to work with Xero and only Xero. That way, we’re the Xero experts and know the software inside out! If you’re interested in using Xero, give us a call we’d love to talk you through the software!
Should we do it in-house?
Whether or not you should do your own bookkeeping depends upon the complexity, and where you are on your business journey.
If your bookkeeping requirements are complex, then you will need a professional.
If you’re bookkeeping requirements are straightforward and you’re just starting out on your business journey, then you should definitely consider doing your own bookkeeping, as the chances are you don’t have the funds just yet to pay someone to do your bookkeeping for you.
But, before you start doing your own bookkeeping, you need to make sure you have the right set of skills. A good bookkeeper will have:
- to be thorough and pay attention to detail
- administration skills
- the ability to use his/her initiative
- to be open to change
- maths knowledge
- to be able to use a computer and the main software packages confidently
If this isn’t you, you will need to find someone in the business, a friend or family member that has these skills to do the bookkeeping for you.
If you do decide to do your bookkeeping in-house before jumping in, it is definitely a good idea to do some training. Xero has some great courses and guides for basic bookkeeping, which will teach you the basics of using their software.
As your business grows, there will come the point where you need to start working more on your business as opposed to in it. It’s at this point you will need to offload the bookkeeping hat. With only so many hours in the day, it’s impossible to do everything, and it’s time to leave it to the experts!
Should I hire a bookkeeper, or can my Accountant help?
If your bookkeeping is complex and/or you are a growing business, then at some point, you will need to offload the bookkeeping hat.
There are lots of great independent bookkeepers out there, and many bookkeepers offer amazing services. This blog is definitely not meant to discredit the work that independent bookkeepers do, but we believe that the best solution to the problem is to use your Accountant’s in-house bookkeeping service.
More and more Accountants are realising the importance of offering bookkeeping as a service, and at EOG Accounting, bookkeeping is now one of our core service offerings. Despite being Accountants, we feel that bookkeeping is the most important service that we offer as it facilitates so many of our value-adding services.
Click here for 10 reasons why you should use your Accountant’s in-house Bookkeeper.
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This information is subject to change and is not professional advice. Refer to our disclaimer for more details.
