Bookkeeping Basics

Bookkeeping basics are essential for most business owners, although the actual bookkeeping itself can be simplified by following the advice further down the page. bookkeeping is a subject on which a new business can stand or fail, the financial control that the entrepreneur has over his business is key to success. The bookkeeping / accounts verify the old adage, “if you can’t measure it, you can’t control it”.

A good accountant is the first requirement, it need not be a large cost, I would suggest that you engage a small accountancy company at first, have a meeting before setting up your business, your accountant is the person who can help you more than any other. The major work for your accountant is usually at the end of the business year, therefore with many smaller accountant companies the first invoice will come after the year end.

If finance is restricted then have a first consultation with your new accountant, he should not charge for the first meeting where you will decide on keeping accounts, (more of that later), bank accounts and any registrations you may need in your chosen field.

Remember, you are the client and don’t accept anything you feel you cannot afford at this stage. Most small accountancy companies are in business for the long term, they understand the cost of setting up a business. It is possible the accountant will agree to delay any invoice for the first few months.

One way to save money on a business startup is to use an online accounting service. This does not require any purchase of software, you don’t have to worry about backup of files and usually the systems have a relatively easy to learn user interface.

All your transactions will be recorded on the internet and you can have a snapshot of how you are doing at any time, this is called a profit and loss report. It can be taken at any time, but usually you would check your online system and reconcile it with your bank statements. Many accountants also use more sophisticated versions of the same system.

The internet systems usually cost from 10$ per month, depending on the level of complexity and facilities you need, typical systems are:

www.kleisteen.nl – in English and Netherlands

www.outright.com – Simple easy to use North American compliant free system although some extras are charged for.

www.ledgersonline.com – USA based service

www.kashflow.co.uk – UK based service

If you search for online bookkeeping in your region, you should be able to find a suitable service. Whilst there is some knowledge required, most services have extensive online familiarization courses.

The instruction required to use these systems is generally much less than a typical software package. I will be including more instruction on Profit and Loss, Cash Flows, Balance Sheet on this site in the near future. You can learn much about bookkeeping basics from operating such systems.