| Every business is required to keep bookkeeping | | | | essential information. Using bookkeeping software has |
| records to produce at the end of the year (Calendar | | | | many advantages. First of all any small business that |
| or Financial) a set of accounts to show the business | | | | has purchased bookkeeping software is more likely to |
| expenses, sales income and the net profit for tax | | | | keep regular up to date accounts than one that has |
| purposes. New businesses in particular, self | | | | not. And secondly the bookkeeping software is likely |
| employed businesses have a choice in how the | | | | to provide a fixed set of disciplines and produce the |
| financial accounts are prepared and produced. Many | | | | type of records a small business requires for both the |
| of these businesses for financial reasons tend to either | | | | preparation of regular financial statements and the end |
| keep a manual record of financial transactions or | | | | of year tax returns. Another major advantage of |
| purchase an off the shelf software program from their | | | | bookkeeping software is that records tend to be less |
| local retailer and then on their own develop a charter | | | | likely to be lost or mislaid; the packages can be backed |
| of accounts and complete the data entry. | | | | up as required but essential financial performance can |
| There are several advantages and disadvantages to | | | | be improved by greater financial control. All businesses |
| whichever course of action a small business may take | | | | work towards producing a satisfactory bottom line and |
| to produce the financial. But, at the end of the day, | | | | only by producing regular financial statements can the |
| the condition of financial accounts and the financial | | | | business obtain the earliest information to achieve that |
| control that are put in place will dictate how well or | | | | satisfactory performance. |
| badly the business is performing compared to the | | | | Bookkeeping software comes in many different |
| success in the business environment. The underlying | | | | formats from simple spreadsheets to more complex |
| necessity is that if the business does not take a | | | | data based accounting software. For a small business |
| decision on its financial accounting then at the very | | | | the bookkeeping software of choice is often a simple |
| least it must accumulate documents of prime | | | | system requiring limited accounting knowledge but |
| significance such as sales invoices, purchase invoices | | | | must also be a package that produces the desired |
| and possibly bank records during the financial year and | | | | end result. The worst bookkeeping software is a |
| assemble these into some sort of order after the end | | | | complex program requiring prior accounting knowledge |
| of the financial year for tax purposes. Failing to keep | | | | that the small business either does not fully understand, |
| financial records often results in a succession of | | | | cannot be bothered or does not have the time to learn |
| administrative burdens and often also leads to financial | | | | and having tried the system then abandons it. Such a |
| penalties if taxation deadlines are not met. | | | | process just causes frustration and time to start again |
| If the small business owner chooses not to go down | | | | with a different solution. Bookkeeping software in |
| the route of using bookkeeping software or | | | | effect automates the manual keeping of financial |
| outsourcing the financial function to a bookkeeper or | | | | records. To get the most benefit from a bookkeeping |
| accountant then manual financial records must be kept. | | | | software package each small business should prepare |
| Producing an income and expenditure account for the | | | | regular financial records to enhance and improve |
| business using the prime financial documents of | | | | financial control, take financial decisions and achieve |
| business is not rocket science and most businessmen | | | | the desired bottom line result. |
| capable of running and managing a business have the | | | | Bookkeeping can be outsourced to an accountant or |
| skills required to producing the bookkeeping records. | | | | bookkeeper and there advantages in doing so. The |
| The major disadvantage of a small business keeping | | | | financial records are generally maintained in good order |
| manual records is that documents get lost which may | | | | and regular financial reports produced. If the small |
| result in profits and taxes being over declared, fines | | | | business has a volume of paperwork that becomes a |
| and penalties through inaccuracies and often when | | | | burden to process and keep on top of then a |
| accounting is produced in this way it is done at the end | | | | bookkeeper is the best solution. Employing a |
| of the financial year purely for tax purposes rather | | | | bookkeeper becomes essential when the paperwork |
| than as an essential tool of the business and that | | | | burden reaches a stage when it distracts the small |
| reduces financial control within the business during the | | | | business owner from getting on with the main task of |
| financial year to a minimum and often zero. | | | | operating the business. A bookkeeper has to be paid |
| If a manual bookkeeping system is adopted then | | | | and that cost should be viewed as the cost not of |
| disciplined recording of the financial information on a | | | | producing the financial records but as the amount to |
| regular basis should be enforced and regarded as an | | | | be paid to release the time of the small business |
| essential function and not an administrative burden. The | | | | owner and also to produce the financial statements on |
| main purpose of regular accounts being to both see | | | | which action can be taken to improve profitability. |
| and understand the financial position of the business | | | | In conclusion each small business should evaluate their |
| and take positive action as required at the earliest | | | | options and time commitment. A manual bookkeeping |
| opportunity to achieve a satisfactory financial result. | | | | system may suffice but the business may be better |
| Other alternatives include utilizing bookkeeping | | | | served using bookkeeping software & services to |
| software which is effectively often a manual system | | | | increase financial control and performance. |
| in itself but within definite parameters to produce the | | | | |