Small Business Bookkeeping Methods

In today’s video I’ll provide some tips and insight into the small business bookkeeping methods.

As a firm of chartered accountants, ca4it accepts a client’s books in absolutely any format whatsoever. And you should see some of the books we receive! NOT pretty! However, keep in mind one vital factor: the more organized your books are when they arrive at our office, the less time we’ll have to spend on them, which means, of course – you got it – your final bookkeeping services bill will be significantly lower. Let me give you a few important tips to help you avoid that situation so you can save yourself some hard-earned cash!

Here goes:

One of the biggest factors affecting your final accounting services bill is the method you choose for bookkeeping – and the accuracy of your work. It’s best to prepare your books in one of four ways:

ONE: Use a General ledger system like Quickbooks, Simply accounting, or AccPac;
TWO: Use a spreadsheet;
THREE: Use CA4IT’s online tool; or
FOUR: Have the work done by a bookkeeping service.

Now here’s some pro’s and con’s: The advantage of using a general ledger system is the variety of timely reports that can be produced. For business managing inventory, or for aging either receivables or payables, these reports can be integral to the business’s success.

Now here’s the disadvantage: While most people are under the false impression that using a general ledger system will reduce their accounting fees, it’s virtually inevitable that doing so will lead to higher accounting costs. Also, this method requires a greater time investment by the business owner/bookkeeper. Why’s that?

I’ll tell you: for the most part, it’s due to the necessity of managing opening and closing balances. Once you endeavor to use a general ledger system, you’ll need to ensure that your accountant provides you with any adjusting entries they’ve made. If you don’t add these to your records, your next year’s opening balance won’t match your financial statements, and your books will become a mess very quickly.

While a spreadsheet doesn’t have all the bells and whistles of a General ledger system, it usually works well enough for most independent contractors. Since most independent contractors have very few balance sheet items, it’s usually easier to simply enter all transactions into a spreadsheet and have the accountant convert the entries into debits and credits. Most accountants will have their own sample spreadsheet that their clients can use. At ca4it, ours is called the CRED Manual, which stands for Capturing Revenue and Expenses data.

If your accountant does provide a sample spreadsheet, it’s recommend you use that – rather than create your own – as they’ll be more familiar with their own methods, and spend less time on your books when you use their template. Finally, one of greatest advantages of using a spreadsheet is that there’s no software for you to buy and very little training required.

Now here’s some important news: Recently, CA4IT launched our new online tool intended to replace our CRED manual in excel format. While we will continue to support our CRED manual, we encourage clients to switch to our new online manual, as we believe it’ll dramatically reduce the amount of time you spend preparing your books. This new tool sticks to the kiss principle and has 4 super simple steps: ONE: Upload your bank and Credit card statements; TWO: Enter any expenses not found on your bank statement; THREE: Enter any invoice not found on your bank statement; and FOUR: Use ca4it’s Integrity checker to allocate transactions not found on your bank statement to the appropriate account.

Let me tell you… our “Integrity Checker” is a ground-breaking achievement! It allows you to allocate a group of transactions by simply entering a search criteria or vendor description, date range and the account you would like the transactions to be allocated too – and voila! What used to take hours and hours of tedious inputting is all done in seconds.

However, even if this seems too tedious for you then outsourcing just may be the answer. Hiring a bookkeeper or bookkeeping services company will reduce your level of stress, and free up much of your time so you can spend it doing more productive things. While hiring a bookkeeper can cost as much as $50 an hour, CA4IT has developed a unique and highly cost effective bookkeeping service: Simply file your receipt document in an envelope and mail it to us. We’ll take care of the rest: We’ll scan it, put it on a secure server, and link your financial statements back to that source document. If you’re wondering about just how cost effective this service is, I’ll tell you: This unique service is priced per volume of transactions rather than an hourly rate, which comes out to being roughly half the cost of a traditional bookkeeper. Now if that’s not good news, I don’t know what is!

So unless you absolutely LOVE bookkeeping and can’t imagine your life without it – NOT!!! – ca4it’s got what you’ve been looking for. And after all, don’t you feel your time would be better spent on the golf course – or spent enjoying quality time with your family? Or perhaps you feel it would be better spent working on your business.

Bookkeeping – or getting the numbers right – is the first step in completing your corporate year end. Common sense tells us that this step is truly critical: The bottom line is – the better organized and prepared your financial information, the lower your accounting fees will be. Here’s another important tip: No matter which bookkeeping method you choose, make sure you take the time to make sure your information is accurate – and that you’ve tracked every dollar you have spent. Sounds like a GOOD THING to lose to me!

Finally, for more information on what expenses to record, please see my earlier video entitled “What’s deductible?”, and for more information about ca4it’s on-line Integrity Checker service, please see our video entitled “Online Bookkeeping”.

Andrew Wall

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