Definition… Martial, ‘of or appropriate to war, warlike’
The subject of bookkeeping and how to best do it comes up time and time again. “How should I be doing my bookkeeping?” is one of the ten most common questions we get from a potential new client.
Bookkeeping may not be the most obvious ‘martial art’ form that springs to mind, but there is significant similarity. Repeated good bookkeeping practices will reap rewards of reduced costs, more accurate and useful information and significant time savings. So is it time to go to war on the books?
Doing-it-yourself
If you go the ‘do-it-yourself’ route then make sure you don’t spend more time doing it than you could otherwise earn, and that you choose the most appropriate software option available. Get either of these wrong and it can be very expensive. Essentially, there are 3 input and processing options.
Online
Online bookkeeping works in an html environment which means your bookkeeping function is accessible through a web browser. This can be useful when you want on-the-go access but be careful as the monthly subscription fees can mount up. Also, the packages tend to be quite complex.
Spreadsheet
As a general rule, spreadsheets keep it ‘Simples’. Just list everything you earn and everything you spend. Although spreadsheet bookkeeping has had some bad press over the years (mainly from software houses trying to sell over-engineered software to smaller businesses), for the smaller business, keeping it simple has a lot of benefits. Just choose a good spreadsheet format before you start.
Software
Buying a bookkeeping program and installing it onto a pc is the most traditional approach. Nothing wrong with this but the programs can be over-complicated. Be careful of programs that have more function than you need. Having all the ‘bells and whistles’ is more likely to slow you down.
Out-sourcing
If you decide not to do-it-yourself then there are two main options.
The Bookkeeper
Employing a bookkeeper can be expensive but if they are quicker and cheaper than doing it yourself then get one, and quickly. Anything else is a false economy. Or get one if you just prefer not to do the books. But get one that knows their ‘onions’ and one that can administrate for you if you need it.
Plastic Carrier Bag Job
For some clients, despite the hype, there really is nothing wrong in sending all your records in a plastic carrier bag to your accountant at the end of the year. For a small fee a junior clerk will process the records. For VAT accounting your accountant will be able to offer a quarterly management accounting service.
Summary
Getting your bookkeeping right is important. At Fifth Element we come across lots of cases where the business owner is spending hours and sometimes days which could be better spent, or simply undertaking a task they are not best-suited to. Let’s not forget, “It is important to work on your business, not in your business”. If you decide to go it alone then make sure you choose the best method possible. And if in any doubt, ask your accountant if what you are doing is the best option for you.