So you are running your own business and want to keep doing the bookkeeping your self, but you just don’t know what to do, plus you just don’t have the time to research it either. This is pretty typical of business owner operators. The problem is that if you don’t get your books in order it will cost you a lot more at the end of the year when you hand your Accountant a box full of receipts, plus without having your books up to date how on earth do you know how your business is performing.
Keeping your books up to date not only saves you money on your Accounting fees but more importantly by having your figures up to date, you can see if your business is making any money or not. It is vital to keep a close eye on your finances. You can see if your debtors need chasing, or if you are spending too much and keep it all under control.
So where do you start from? Lets break it up into small steps. Firstly you need to collect all your information that is relevant to the business – all your income and expenses. Then you need to go through them all.
- Collect all your receipts for any expenses that relate to the business and group them into different categories (It would be handy if you had a chart of accounts ….. that’s if you even know what a chart of accounts is, but that is another story altogether)
- Group all your income invoices together
- Gather all your bank statements
- Collect your business credit card statements
- Any loans and loan agreements
Start with your bank statements, now enter all the money in transactions onto your accounting system. Every deposit should be linked to an invoice that you have provided to your customers, making sure that you enter the correct tax amounts if applicable
Next step is to enter all the money-out transactions from your bank statement and make sure you have the matching receipts and enter in the correct tax again if applicable.
Maybe you paid cash for some expenses so please enter those in your system but they wont be paid out of the bank account they will come out of a loan account that you are loaning the business to pay these bills
Have a look at all your credit card statements as well, perhaps you paid for some business expenses by your personal credit card, so enter these into the system as well and again the balancing transaction should be against your loan account.
Once everything has been entered into your system you should be ready to see how your business is performing. Its worthwhile investing in a proper accounting system and yes there are plenty out there to chose from. Make sure you select one that will suit your needs, so spend some time investigating.
If anyone has any suggestions or recommendations please let us know by commenting below.