Small Business Bookkeeping Tips 2

This is the second page of Bookkeeping Tips. The link for page 1 is at the bottom of this page.

Bookkeeping Tips #2Small Business Bookkeeping Tips 2

Small Business Bookkeeping Tips : #1

Your Bookkeeper Needs You

Are you a small business owner employing an office administrator to do the bookkeeping? Do you think she’s great because everything she says about the books sounds just like she knows what she’s doing and at least you don’t have to? Reality check….

…just because your bookkeeper knows more than you about bookkeeping, doesn’t necessarily mean it’s being done right.

You need to take an active interest in the financial aspects of your business. Don’t sit back and leave it all to the bookkeeper. It’s not fair to them and your business could end up in dire financial strife.

The basic activity of bookkeeping is ensuring that all the financial transactions are coded to the correct account on the chart of accounts. Choosing the right account is wholly dependent on what each transaction is. 

Transactions coded to the wrong account will cause your accounts and reports to be wrong…

…reports that you would take to the bank to get that all important loan that you are sure can be paid off based on the information provided by your trusted bookkeeper.

Bookkeepers need to have a complete understanding of where in the accounts to put each transaction.

For example: 

1. Does a clocking-in machine go to wages & salaries?

2. Does the purchase of a vehicle go to vehicle expenses?

3. Do the payments against a loan go into the loan expense account?

These are just some of the things a bookkeeper needs to know how to handle. 

(See the answers at the bottom of this section)

A specialist in accounts such as a professional consultant bookkeeper can do a full review and advise you of any errors. If you have any concerns about what your bookkeeper is doing, find one of these specialists and get them to check out your accounts. 

If you are concerned about upsetting your bookkeeper when you do this, you can say that you are investigating ways of improving the business.

If the specialist comes back to you with a raft of errors, does this now mean you have to fire your bookkeeper?

No! Unless they are deliberately crooking the books to steal your money, you should consider sending your bookkeeper on some courses to increase their skills. 

Perhaps even a couple of one on one sessions with the specialist mentioned above will get your bookkeeper on track. 

Training your employees is a deductible business expense – good news eh!

Another way to approach this issue is by getting your employed bookkeeper/office administrator to do the day to day bookkeeping entries, and then outsourcing the preparation of the monthly reports to a professional bookkeeper.

The professional will be able to review the accounts ensuring all has been entered correctly (they have their ways and means of doing this) and then produce reports and explain to you how your business is doing financially. 

Doing this on a monthly basis will keep things in good order, right up to date and keep you well informed.

A clocking-in machine is an equipment purchase – only payroll payments go to wages & salaries. 

A new vehicle goes to the vehicle asset account, not expense account. 

A loan payment is split - principal payments to the loan liability account, and interest payments to the interest expense account.

Small Business Bookkeeping Tips : #2

Bookkeeping Outsource

Bookkeeping OutsourceSmall Business Bookkeeping Tips 2 - Outsourcing

If you, the business owner, are also doubling as the office administrator/ bookkeeper and finding the bookkeeping too hard, then outsource the whole lot.  

More and more people are going this route of outsourcing:

  • Cost Effective : Because you only need to pay for a couple of hours of work a month opposed to paying a regular wage, and 

  • Accuracy : You are getting that necessary professional work done on your accounts so you can be confident they are correct.

It can take a professional bookkeeper 2 to 4 hours to process one month’s worth of bank transactions, finalize a bank reconciliation, and produce a set of reports.  

You can outsource as little or as much as you want done. Below is a list of the most common tasks that are a part of the bookkeeping process. 

You can ask a bookkeeping professional to carry out only one task or a combination of tasks whilst you or your employed office person does the others.

  • Enter transactions to the cash book, to the correct account codes with the correct sales tax options

  • Process bank reconciliations for the main account, savings accounts

  • Prepare sales invoices

  • Enter purchase invoices

  • Prepare a creditors report and upload batch payments to the bank

  • Prepare a sales report and keep in contact with overdue debtors

  • Process payroll and set up payments to employees

  • Process payroll tax reports to the tax department and set up payment

  • Process sales tax returns and set up payment to the tax department

  • Prepare the monthly reports

The great thing about experienced professional bookkeepers is that they are usually in a position to give you great business advice over and above your day to day bookkeeping needs such as :-

  1. Investigate new software and advise if any are a good fit for your business 

  2. Attend business meetings with you and your banker and help explain the accounts to the banker if you find it a little difficult  

  3. Help prepare your annual budget and cashflow reports 

  4. Train your office employees

  5. And much more

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Small Business Bookkeeping Tips 2

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