Bookkeeping In The First Year
We often encourage new business owners to attempt their bookkeeping themselves in their first year. There are various reasons for this:
- Encourages business owners to understand their numbers and implement financial controls.
- If they do wish to employ a bookkeeper in the future or outsource then they will understand the complexities and amount of time it takes to complete the books well.
- If they have time to do this it could save some money when cash could be scarce at the start of a venture.
- Gives them an understanding of the system they are using, so that they can use it for management information in the future, and also check that their future bookkeepers are doing a good job.
Considerations For Being Your Own Bookkeeper
If you are considering preparing your own bookkeeping then I would recommend the following:
- Consider what system would be best for your business, and future proof it, as it can be expensive to change later.
- Think about what you need from the records, what your accountants require and what are statutory requirements.
- Do you need an integrated system with your CRM (customer record management) system, an online sales system etc?
- Do you want to use a software package (on or off-line), customised spreadsheets or manual ledgers.
- Ensure that you get training if required for whichever system you use, and also an introduction to the basics of bookkeeping.
- It is essential to have a bank account reconciliation procedure.
- Check whether the records are easily understandable of others, e.g. your accountant or if you had an HMRC records check.
Considerations For Getting A Professional Bookkeeper
If any of the following apply to you, you should seriously consider getting a professional to do the bookkeeping:
- You don’t have the patience for software systems, spreadsheets etc.
- You have a shortage of time, running your business should be your priority, and if you are at maximum capacity outsource anything that you can to relieve you.
- You don’t consider yourself numerate, if you aren’t bookkeeping could take you an inordinate amount of time.
- You aren’t organised and hate administration.
Advantages Of Outsourcing Your Bookkeeping
There are various advantages of outsourcing your bookkeeping, or employing an in-house bookkeeper:
- Allows you to view the reports at a management level and not get bogged down in minutiae.
- Can go hand in hand with good financial controls, such as cash forecasting, debtor management and budgeting.
- If you have excellent records you should find that your accountancy bill will be significantly less than if you have poor records.
- Ensures high quality records, so that you can take appropriate management action, e.g. understanding if certain clients are constantly late paying you.
Finding a Good Bookkeeper
What to do when looking for in a bookkeeper:
- Ensure that they are highly organised, numerate and communicate well.
- Ask for references or referrals.
- There are a lot of substandard bookkeepers so ensure that you get references and referrals.
- Check that they have relevant qualifications, e.g. AAT (Association of Accounting Technicians) and ICB (Institute of Certified Bookkeepers).
Other Outsourced Bookkeeping Considerations
Other tips if outsourcing:
- Ask your accountant to feedback their view of the standard of bookkeeping.
- Ask your bookkeeper to give you reports, if using a software package there will be numerous reports available.
- If using a self-employed bookkeeper make sure that you have a service contract with them, so that HMRC don’t view you as their employer.
If you need any guidance with outsourcing your bookkeeping or setting up your own bookkeeping system please do not hesitate to contact the team at Goringe Accountants.
Tags: aat accountancy accountant accountants accounting bank account reconciliation bookkeeper bookkeepers bookkeeping business owners HMRC inland revenue ledgers new business record management system statutory requirements