Bookkeeping includes everything from basic data entry to tax prep. Let’s look at the core jobs and see how they’re done.
How to handle bookkeeping in your small business
You may want to do some bookkeeping jobs yourself and get an expert to help with others. Perhaps you’re still feeling your way with double-entry bookkeeping, or you’re afraid of getting payroll wrong, or you’re not cut out for chasing invoices. You can outsource any or all of those things.
We’ll look at how businesses commonly break up bookkeeping jobs between themselves and professionals.
Common DIY bookkeeping jobs
Many small businesses look after their own:
- Data entry: Nowadays, software can pull transaction data from banks and read photographs of receipts, so this has become a much smaller job.
- Bank reconciliation: Most business owners take on bank reconciliation. While still not necessarily a favourite job, apps that allow you to do it on your phone have sped things up.
- Accounts receivable: Preparing and sending invoices is straightforward if you have good templates and processes. You can always get professionals to help to chase overdue invoices.
- Accounts payable: If a business has just a few suppliers and cash in the bank, paying the bills is simple enough. But professionals can really help if cash flow starts to become an issue.
Small business owners may also keep payroll in-house if they have just a few employees and the capacity and skills to manage it.
Outsourced bookkeeping jobs
Even business owners who are comfortable with numbers will get outside help with:
- Quality control and fix-it jobs: Bookkeepers can check your ledger for mistyped or misplaced entries, and generally make sure your books are reconciled.
- Financial reports: Profit and loss reports, balance sheets and the like determine your taxes and inform big decisions. You don’t want to make mistakes here.
- Tax returns: Simple returns may be easy enough for a business owner to prepare but it’s good to use a professional if there’s any complexity. They may also find ways to lower your tax bill.
- Understanding what all this stuff means: A bookkeeper can interpret financial reports for you, and tell you what they mean for your business. They can help you troubleshoot problems as well as plan for the future.
- Payroll: Payroll gets hard fast, so it’s a good idea to involve an expert at some point and perhaps outsource it altogether if staff numbers grow or your payroll is complex.
- Support with Making Tax Digital: Most bookkeepers can guide you through choosing and implementing MTD-compliant software and supporting you with keeping your accounts in order.