Bookkeeping is black and white!
How to write a Bookkeeping blog without boring the pants off you, that is the question? What to write about, even more challenging! But after careful deliberation and some midnight soul searching, I decided to start at the beginning.
Congratulations, you have just started your new business, done all the correct things, opened your bank account, complied with legislation, business licences etc., set up a Facebook page, printed the business cards and now you are ready to go. Possibly you do one of two things to deal with the ever growing pile of receipts that quickly build up on your desk or in your car. You think you will just dump all your receipts in a shoe box and deal with them over the weekend! That should do it, after all how difficult can it be? Then you'll create an Excel spreadsheet of money in, money out, and that should do the trick. Don't get me wrong, this can be an excellent solution as long as you are disciplined and know what you are doing.
From experience I can tell you that this optimistic scenario is never going to happen, and before you know it you wake up one October morning before tax time, and a cold sweat breaks out on your forehead and an icy hand grips your heart as you realize you are way behind in your paperwork.
Alternatively, you are super tech savvy and you Google 'bookkeeping programs' and up comes a package, so you sign up for the smallest and cheapest one and proceed to follow the prompts. You start loading data not really knowing what's going on, (garbage in, garbage out), you'll learn as you go along, you tell yourself. The further down the line you get you begin to realise that perhaps this was a bit above your pay scale, so you ditch the idea and resort to the shoe box, resolving to deal with it later.
You will save yourself a lot of time, headache and heartache if you get a good bookkeeper from the start. Said good bookkeeper will set up a Chart of Accounts that suits your business structure i.e. sole-trader, Pty Ltd, Partnership, Trust etc., and also the type of business you are engaged in, they will also correctly allocate your GST codes so that your BAS report spits out the correct figures and also set up your Payroll for you if you have any employees. Now you are in business. By the way, the good bookkeeper is going to have to spend a considerable amount of time undoing the mess you made in the set up of your accounting program to don't even go there in the first place.
Bookkeeping for me is black and white, as long as all transactions are posted to the correct accounts and the bank statements balance, then you should be okay! So along with some other entries such as opening balances and correct recording of assets and liabilities and you should be off to a good start. Bookkeeping is changing so fast, if you blink you might miss something. From years of recording in ledgers we moved on to desktop accounting and now Cloud Accounting/bookkeeping has taken the world by storm. It is so exciting, revolutionizing the job of a bookkeeper and taking the game to a new level in a very short space of time.
No more backing up is one definite advantage. What a treat. Every time you or your client logs in, there sit all your transactions, everything as you left it. There is still some resistance to Cloud Accounting and we hear nervous questions such as 'what if I, or my accounting package provider loses my data'? It's a scary thought, but we can be assured that this is virtually impossible, given that all the data is backed up to at least two sometimes three servers in separate locations, we can happily work on without fear of anything going missing. Fingers crossed!
The second advantage is that Cloud accounting provides our client with 'instant reporting' this means that provided your bookkeeper has matched the bank fed transactions and allocated them to the correct income and expense accounts on a daily basis, then the client doesn't have to wait to find out if a profit or a loss has been made. A definite bonus is knowing how much GST you have to pay at the end of a quarter as a quick snapshot of this is always at hand. (Another blog for another day on this subject).
Thirdly, the question of billing has the die-hard desktop software bookkeepers in a tizz. Those of us who have seen the 'light' so to speak, are embracing the new model of 'value added billing' as opposed to time based billing. You have got to admit that as a client, I would far rather know that I was going to be charged a flat fee on a monthly basis, than to sit chewing my nails waiting for the bill to arrive from the bookkeeper who charges on an hourly basis. So for me and my business it is the new model. Be warned though, if your books are behind two or three years, or more, you will be charged by the hour to get these up to date before going on to value added billing. A small price to pay for peace of mind.
Lastly, why the zebra? Well, her name is Poppy and she was born on or around the 11th November about six years ago. (Armistice Day, when we all wear a poppy on our lapels). I just love Zebras, their stripes are fascinating, are they black on white, or white on black? Anyway, my name is Debra, so I thought I would adopt her as my logo seeing as bookkeeping is a black and white affair, I thought it was quite fitting.
Yours in bookkeeping - until next time!