Bookkeeping, the task that most business owners hate, find painful, boring and time consuming. In my experience, they try saving money getting it done by trying to manage it themselves, usually unsuccessfully, or they think their sisters, brothers, mothers, aunties or teenage children can do it rather than hiring a professional bookkeeper! I believe that the reason for this is business owners see bookkeeping as processing receipts “data entry”. Where is the value in that?
Bookkeeping can be a confusing trade and can be hard to tackle for businesses trying to run every aspect of their operations by themselves. Some people even think that bookkeepers are jargon-spouting number crunchers that overcomplicate finances and charge extortionate rates for a superfluous service.
These negative stereotypes of bookkeeping stand to the testament of the importance of practicing good bookkeeping habits. The complicated nuances behind managing your company’s finances won’t simply disappear if you don’t hire a bookkeeper to tell you about them.
It doesn’t matter if you’re a huge multi-national conglomerate or a humble bakery on the corner of a residential street, any business can benefit from a good bookkeeper.
ere are just some of the myths that surround the bookkeeping profession and why they are nothing more than myths.
Only big businesses need help from a bookkeeper
Even the smallest businesses can benefit from bookkeeping. Just because the company may be making a lot less money than a big corporation doesn’t mean that money is easy to manage. The same rules apply to all businesses, no matter what the size.
If anything, a smaller business is going to have an easier time when it comes to going over the books because there will be less records to organise and take into account. A bookkeeper would take no time at all to keep you on top of finances.
Regardless of your company’s size, you could always use the spare time to concentrate on other duties within your company. Bookkeepers save you time and money in the long run.
My business doesn’t make enough money to hire a bookkeeper
The same rule applies here. Every single penny that your company makes needs to be accounted for, whether it’s going in or out. Leaving money unaccounted for can cause some serious financial troubles further down the line, resulting in a fine or even prosecution in extreme cases.
Keeping on top of finances is crucial as soon as your business is founded, because it can help your business get off to a promising start and keep paperwork from piling up and making bookkeeping extremely difficult further down the line. A bookkeeper can keep you up to date on all of your finances and ensure that you don’t leave any stone unturned.
If you keep putting off your bookkeeping until you’re ‘making enough money’ then you may never make enough money – not for bookkeeping or any kind of business progression.
Bookkeeping is just about maths
Yes, mathematics is a part of bookkeeping, but there is so much more involved. Taking on your own bookkeeping could end in disaster if you assume that all you’re doing is counting.
One of the most important aspects of bookkeeping is getting in contact with the right people to ensure that the information that you have is reliable. Communication is key to ensure accurate records.
A good bookkeeper is very well connected and can help your business connect with only the most trustworthy partners. For instance, if you’re unhappy with the results you’re getting from a particular supplier of goods, a bookkeeper can research good candidates to take their place, and advise on which firms to avoid.
Bookkeepers are more than just bean-counters, they’re a valuable asset to your company.
Anyone can do my bookkeeping
There’s a reason why bookkeeping qualifications are available. Bookkeeping, as a profession, is very complicated and comes with a myriad of responsibilities that require very specialised knowledge of finances, the economy and other key players in the sector they are working in.
Bookkeepers go through years of training to become qualified for the job, learning the specific techniques behind referencing information and properly analysing accounts. Through their training they learn to understand different kinds of transactions and how to properly categorise them.
The responsibilities of a competent bookkeeper go far beyond common knowledge, so your finances will likely suffer if you leave them in the hands of a friend or family member.
I’ve been okay so far, I don’t need a bookkeeper
But what if the financial climate changes? What if your idea of ‘okay’ is actually a mountain of unaccounted records just waiting to collapse on top of you? What might seem manageable now could become more than you can handle further down the line.
Businesses are evolving all the time, and a bookkeeper can keep you on top of everything as it changes. It’s a bookkeeper’s job to foresee these sorts of sudden changes and help your company to safeguard itself from unexpected tax changes.
Not only that, a bookkeeper can also provide a fresh perspective on your company’s financial situation, which can help you realise where your company might be struggling.
Don’t let your businesses suffer…
Don’t ignore the importance of your company’s finances or try to do them yourself. Give yourself some much needed extra time, a fresh perspective and an untapped well of potential connections and invaluable financial advice in the form of an experienced bookkeeper. They’ll pay for themselves in no time.
To find out more about bookkeepers, the services they can provide and how you could train, visit the International Association of Bookkeepers.
So Monday morning is here and I hope you all had a fantastic weekend. I wanted to share some tips of what should happen every month to ensure you get the best information from your systems. This may be what your bookkeeper would do anyway, but it is worth knowing so you can ensure it happens!
- Ensure all sales invoices have been done and sent to the customers
- Apply all payments received from customers
- Send out customer statements
- Ensure all purchase bills have been raised
- Apply all payments made to purchases
- Reconcile your bank (with auto bank feeds this is easy to do!)
- Once all transactions are reconciled – ensure the statement balance in Xero and the actual bank statement are the same, just in case something was missed off on the direct feeds
- Reconcile the VAT (if you are VAT registered) – even if you are not submitting VAT this month, reconcile the VAT return back to your VAT control account
- Run through the balance sheet control accounts and make sure that prepayments have been expensed and accruals reversed if applicable
- Print your profit and loss reports and compare the results to prior months.
- Discuss with your mentor / bookkeeper / accountant if you have any questions
If you have any questions please don’t hesitate to get in touch: email@example.com
Introducing ‘The Cloud’
When accounting systems first became popular, the business would require a server, someone to manage the server and all related IT and infrastructure functions, backups and end user support.
This was very costly and often businesses would lose months of work because the backups were failing and no one had noticed, or they had forgotten to take a backup offsite for safe keeping and the last successful backup was overwritten. Sound familiar?
What does ‘the cloud’ mean I hear you ask! You have to forgive me, as these acronyms and words roll off my tongue with ease, as it has been my life for a good twenty plus years!
In simple terms, what cloud technology allows you to do is to take advantage of someone else’s servers and someone else’s IT manager, and to have access to your information anywhere, anytime and on any device and saves you a lot of money by not having to have all the staff and infrastructure in house.
The cloud is fun and opens up numerous possibilities to help you provide the best service to your customers.
Here are some common problems with traditional desktop applications
- Accounting information is only fully up-to-date on one machine (server)
- Software must be upgraded regularly, often at a cost
- The software is often licensed for use on one computer or per user
- Using a USB drive to move data is inconvenient, unreliable and not secure – often small business do this to get their accounts over to the accountants
- It can be difficult and slow to access financial data and customer details remotely
- The software can be expensive to buy
- Adding more users can cost a lot of money
- The pricing may not be transparent, with hidden fees for updates or extra features
Now for the benefits of the cloud accounting software
- Financial data flows automatically into the software from bank accounts and other sources
- You can access accounts through any device with an internet connection
- You have instant review of customer data and information, such as cash flow
- There are many powerful tools and applications to help process accounting data
- It’s easy for all the team to use
- It grows with your business, no need to upgrade to the next version – expansion is not an issue
- There are no more worries about outdated software, IT costs or server outages
- You pay on a simple subscription basis, paying only for the services you need and services can be added and removed at any time
Basically, cloud accounting will give you fast access to the information you need to make smart business decisions from anywhere at any time.
The cloud really is the safest place for your accounts data. I have to also add that the cloud is not just for accounting data. You can use cloud software for all your documents, such as word, excel, PowerPoint and more, and you can save your documents to the cloud, once again allowing you access anytime anywhere and on any device, provided there is internet connection.
Business moves really fast these days and having real time information is not only productive and efficient, your customers will love it and therefore you are likely to get repeat business due to an excellent service being provided.
Managing your costs is probably one the most important things to do as a business owner (other than sales of course!) This blog post will cover the best way to work with your virtual bookkeeper using Receipt Bank to help manage your costs.
Getting your source documents sent digitally not only saves money on filing and printing costs, but also time. Having your source documents attached to your transaction in your finance system (in my case Xero), means no more scrabbling around in files trying to find the original document.
What do I mean by source documents? Source documents are the invoices, receipts or bills that your suppliers provide you with as proof of purchase. These contain important information, such as VAT (tax) information, date of the purchase and what has been purchased.
From now on I will refer to these various expense source documents as bills.
Most tax authorities require you to keep your receipts and invoices (bills) for up to ten years (check with your local tax authority to make sure you know what the time period that is required) as proof should you ever have the misfortune of having a tax inspection done.
Historically you had to keep files and files of these documents in your office.
Now with the cloud solutions you can store these electronically. There are a number of ways you can do this, however I will focus on Receipt Bank and Xero, as those are the two main applications I use. There are however many others, so do your research to find the one that works best for you. The principle will be the same no matter what packages you have decided to use.
Receipt Bank, as I mentioned previously, is an app that allows you to extract the key information from your bills, removing the need for manual data entry. Receipt Bank can then publish the data to your accounting software or it can be downloaded as a spreadsheet or used to create expense reports.
Receipt Bank has many ways in which you can upload your bills, take a picture using your smart phone or tablet app, scan and upload, email or use drop box to save your documents, receipt bank will then scan the drop box and upload all new documents. In addition, you can opt to post your receipts to Receipt Bank and they will upload them all for you!
Once the source document is in Receipt Bank, you can then see the document, code it to the correct expense, make sure the VAT is correct if applicable and then submit it to Xero (or your preferred finance system). So much quicker than manually keying in the transactions.
This document then gets created as a purchase bill in Xero and the document is attached, so at all times you can click on the document to see the original image.
This is very handy for accountants when they are preparing your final accounts too. No more sending files and having to provide source documents for transactions they may query.
Receipt Bank can also be trained, so for example if you always buy your stationery from a certain supplier, you can setup a rule on that supplier in Receipt Bank, telling the system, which nominal code it should post to and what VAT rules are applicable and then set it to auto process. Every time you upload a bill from this supplier it will just process straight through to Xero.
This saves so much time as you do not need to manually process these ones through, leaving only the anomalies or new suppliers to be manually coded and checked.
Receipt Bank can also be used to process expense claims for employees or directors for items purchased personally using the expense function. So as you can see this is a really powerful tool to enable you to work efficiently and save time.
Receipt Bank can also be setup to recognise payment methods. So for example if you paid cash, you can add a payment method called cash and when the bill processes through to Xero, it is automatically paid from petty cash, saving you having to manually apply a payment once it is in Xero.
Similarly, if you paid by your bank card, receipt bank can be setup to recognise that card ending with whatever the last four digits of your card are, goes as paid to the linked bank account.
This saves so much time for the bookkeeper and therefore costs you less as not so much time is required to do your books!
Once in Xero, the bookkeeper can match the items in the bank that are paid and then provide you with a listing of suppliers that need payment and the relevant payment due dates.
This is so important to help you manage your cash flow, as I mentioned earlier in the section about knowing your numbers.
In summary, your role as the business owner is to get the bills into receipt bank by any of the methods that works best for you. The bookkeeper can then ensure everything is processed correctly for VAT (if applicable) and to the correct code being able to then provide an accurate and informative profit and loss statement for you.
Find out more about working with your virtual bookkeeper and using the cloud in my book
Making Tax Digital – HMRC are committed to building a transparent, more integrated and accessible tax system. As at March 2015 the government set out the vision for a transformed tax system and the end of current tax return.
Many small businesses already have access to their secure online tax account and digital accounts for taxpayers have been introduced this year.
By 2020, businesses and individuals will be able to register, file, pay and update their information 24/7. No more waiting till the end of the financial year and getting a surprise tax bill.
The four foundations as per HMRC
Are you ready for Making Tax Digital?
From April 2018, and phased in by 2020, businesses (initially unincorporated), including everyone who is self-employed and those letting out property, will update HMRC at least quarterly where it is their main source of income.
Don’t wait until the deadline, start getting organised now. Trekim Online Accounting Services can help you get ready. Whether you just need some help to get the systems in place and support managing it going forward, or if need bookkeeping help, we can partner with you to help you achieve this.
Click here to get the official document from HMRC
Why business owners need to face up to the challenge of Mobile and Smartphone growth
The business landscape is not simply evolving; it’s changing dramatically, thanks to mobile technology.
Back in 1992 a 22-year-old test engineer sent the world’s first text message. Today, more than 8 trillion texts are sent each year and in October 2013 global users of Smartphones reached an astonishing 1 billion.
The Smartphone that sits comfortably in the palm of your hand has more computing power than it took to put the first man on the moon! You know how helpless you feel when you can’t access your emails? That shows how the business community has embraced email. It’s an integral and essential part of everyday business life.
And what’s the next ‘big thing’ that business owners and entrepreneurs need to face up? It’s the challenge of Mobile and Smartphone technology.
It affects you – Now!
Some readers may think that responding to these changes in technology is somehow optional. In the sense that if you don’t respond, things will carry on as before.
But ‘normal’ doesn’t exist any more! The days of people visiting your website via a PC, for example, is disappearing fast. As you read this, mobile technologies are already having an impact on your business.
I mentioned earlier that global users of Smartphones are now in excess of 1 billion. A recent survey undertaken by Accounting Web and MyFirmsApp showed that over 85% of UK businesses relied on Smartphones for internal and external communication and as their primary route to the internet. Over 50% of local internet searches are carried out by a mobile device.
Let’s put all that into context.
Over half of the people visiting your website no longer view it through a PC or laptop. Instead, they are viewing your website through a Smartphone or tablet.
Have you visited your own website via a mobile to see what your clients and prospects see? Is it fast to load, simple to navigate and easy to contact you using it? If it isn’t, you are likely to be losing customers and potential customers.
The recent survey by Accounting Web showed that 85% of businesses used smartphone and Apps. That means it’s highly likely that your customers and potential customers are trying to communicate with you and your website using these devices. What your clients used to do by phone, PC or face-to-face they now do via an App. And if your business isn’t geared to this technology, they’ll transfer their business somewhere else!
Agility is important
One of the hallmarks of a successful business is its agility. Flexible, open-minded directors and managers who are ready to embrace technological, commercial and economic changes and turn them to their advantage. In an uncertain world, if you can offer a response to the technological changes then your customers and potential customers will welcome it.
Historically, agility may have meant adapting and responding over a period of months. It’s not like that anymore! Having technology at your fingertips 24-7 in real time, anywhere, means you have the ability to respond ultra-fast.
If you would like to discuss how you can prepare your business for the challenge of mobile and smartphone technology, please contact us here.
I get asked this question a lot. I hope you find this useful. If you do decide to go for Xero, please sign up for your free trial here and then get in touch so we can assist you to make the most of this solution. We also offer bookkeeping services if you need them! If you already use Xero and need some help, please get in touch
Owning a small business is exciting. You get to do what you love, day in, day out. But traditionally, small business accounting isn’t exciting. So how can we change this stereotype and make accounting fun and easy?
Xero Touch is the mobile app for Xero accounting software.
It’s a great way for small business owners who are always on the move to manage their finances.
Bank reconciliation, checking account balances, online invoicing and expense management can all be done at the touch of a button – anywhere, anytime.
Your accountant sees the same data as you, so you can get in touch with them through your online accounting app. All your data is in the cloud, so your accountant doesn’t have to wait for files to come through.
You can grant selected members of your team access to Xero Touch, which makes it easy to keep an eye on the numbers.
Try Xero accounting software for free
Accounting challenges face by small business
Xero found when talking to the small business community, accountants and bookkeepers, several things became obvious. It’s clear that all small businesses need good cashflow to survive. But many don’t really understand or manage their cashflow. They also don’t have good visibility of their accounts.
We can change this!
You started your business because that was your passion and you are very good at it. So why let the accounting side be a chore and drag you down? With the cloud accounting that Xero offers, this ‘chore’ is made fun! You get to see how business is performing in real time terms easily and conveniently from any internet connected device.
Having passion for your business is great, but accounting often sits at the opposite end of the scale. It is very important to help ensure your success. Too many people are frustrated with the software they use. Why is that? Small business accounting software has been unintuitive and difficult to use for years. Business owners often find themselves chained to an old desktop in the back room labouring over the finances. With a system like that, it becomes obvious why people don’t have good visibility of their accounts.
We can change this!
Six ways Xero cloud software makes accounting fun
- When statement lines from your bank account are fed into your accounting software automatically, you can see your cashflow in real-time.
- Being able to see bank balances, invoices, bills and expenses at a glance gives you a clear picture of your finances.
- View your accounts in the cloud so you can access them when you want, where you want, on any device.
- You’re free to be mobile – not chained to your desktop. When you can work on the same data as your advisors at the same time, there’s no need to share a computer or exchange files.
- Invoice your clients on site, quickly and easily using the mobile app
- Small business accounting software with free updates means there’s no need for installations or maintenance.
Accounting can be fun and addictive – that’s why Trekim Business Accounting Services does it!
If your software is intuitive, it can be addictive to use. Making money and seeing how your business is doing should be fun. Software that makes doing business a pleasure, can only be a good thing.
What this means for small business
As a business owner, it is important to use software that’s intuitive and easy, as this helps you be more in tune with your financial situation. This means you can avoid problems and take action when it matters, not after the fact, when it’s too late. Adding to that, accountants and financial advisors are able to share the accounts in a real time situation and help with advice. When you get excited about using your accounting software, you’ll notice the positive effect it has on your business.
Interesting linksHere are some interesting links for you! Enjoy your stay :)
- Benefits of our Real-Time Cloud Accounting Services
- Bookkeeping Coalville
- Bookkeeping Derby
- Bookkeeping Leicestershire
- Bookkeeping Loughborough
- Bookkeeping Service for Accountants
- Business Consultancy
- Case Studies
- Case Study – Charity
- Case Study – Financial Services
- Cloud Accounting – how you benefit
- Cyber Security Policy
- DocSAFE Login
- Download Free Tax and Accounting App
- How to Use Cloud Accounting to Benefit Your Business
- Management Accounts
- Our Offering
- Refine your business processes
- Setting up your cloud accounting system
- The Big Benefit of the Cloud
- Understanding the Numbers
- Why move to the cloud
- Why Us