| > | | | | bookkeeping software is more likely to keep regular up |
| All small businesses have to choose between keeping | | | | to date accounts than one that has not. And secondly |
| manual records of financial transactions and the | | | | the bookkeeping software is likely to provide a fixed |
| benefits, advantages and disadvantages of utilising | | | | set of disciplines and produce the type of records a |
| bookkeeping software and or employing bookkeeping | | | | small business requires for both the preparation of |
| services for this purpose. The correct choice will vary | | | | regular financial statements and the end of year tax |
| from business to business but a choice should be | | | | returns. |
| made to achieve the best financial performance. | | | | Another major advantage of bookkeeping software is |
| Bookkeeping records to produce a set of accounts at | | | | that records tend to be less likely to be lost or mislaid; |
| the end of the financial year to show the sales | | | | the packages can be backed up as required but |
| turnover, business expenses and the net profit for tax | | | | essential financial performance can be improved by |
| purposes is an essential function of every business | | | | greater financial control. All businesses work towards |
| enterprise. Medium and larger businesses employ | | | | producing a satisfactory bottom line and only by |
| accounts clerks, bookkeepers and accountants to | | | | producing regular financial statements can the business |
| maintain the financial records and produce regular | | | | obtain the earliest information to achieve that |
| accounting information. Many small businesses chose | | | | satisfactory performance. |
| to do the bookkeeping themselves or outsource the | | | | Bookkeeping software comes in many different |
| accountancy work. | | | | formats from simple spreadsheets to more complex |
| Small businesses and in particular self employed | | | | data based accounting software. For a small business |
| business have a choice in how the financial accounts | | | | the bookkeeping software of choice is often a simple |
| are prepared and produced. A small business may | | | | system requiring limited accounting knowledge but |
| employ the services of a bookkeeper to produce the | | | | must also be a package that produces the desired |
| accounts while another similar business may keep a | | | | end result. |
| manual record of financial transactions while a third | | | | The worst bookkeeping software is a complex |
| option is to use a bookkeeping software system. | | | | program requiring prior accounting knowledge that the |
| Small business has a choice as to how it produces its | | | | small business either does not fully understand, cannot |
| financial records. Some simply do nothing but the best | | | | be bothered or does not have the time to learn and |
| option is to make a finite decision regarding the path to | | | | having tried the system then abandons it. Better to |
| take. Financial accounts, financial control over the | | | | avoid the wasted time and effort by choosing the |
| business activities and the knowledge of how well or | | | | appropriate accounting package at the outset. |
| badly the business is performing is crucial to success in | | | | Bookkeeping software in effect automates the manual |
| the business environment. | | | | keeping of financial records. The most important |
| The underlying necessity is that if the small business | | | | aspect of using a bookkeeping package be it a |
| does not take a decision on its financial accounting | | | | da6tabase accounting system or a simpler set of |
| then at the very least it must accumulate documents | | | | bookkeeping spreadsheets is the enhanced financial |
| of prime significance such as sales invoices, purchase | | | | control and the effect that intimate accounting |
| invoices and possibly bank records during the financial | | | | knowledge can have to influence the net profit. |
| year and assemble these into some sort of order | | | | Bookkeeping can be outsourced to an accountant or |
| after the end of the financial year for tax purposes. | | | | bookkeeper and there advantages in doing so. A |
| Failing to keep financial records often results in a | | | | quality outsourced finance function does produce |
| succession of administrative burdens and often also | | | | accurate timely financial records. If the small business |
| leads to financial penalties if taxation deadlines are not | | | | has a volume of paperwork that becomes a burden |
| met. | | | | to process and keep on top of then a bookkeeper |
| A minimum of a manual record of accounting records | | | | may be the best solution. |
| is required should the smaqll business not use | | | | Employing a bookkeeper becomes essential when the |
| bookkeeping software or utilise the services of an | | | | paperwork burden reaches a stage when it distracts |
| accountant or bookkeeper. Producing an income and | | | | the small business owner from getting on with the |
| expenditure account for the business using the prime | | | | main task of operating the business. Outsourcing |
| financial documents of business is not rocket science | | | | bookkeeping costs money but may be an appropriate |
| and most businessmen capable of running and | | | | action if the time released can be better spent gaining |
| managing a business have the skills required to | | | | additional business and improvong profits. |
| producing the bookkeeping records. | | | | Useful in many circumstances but using a bookkeeper |
| The major disadvantage of a small business keeping | | | | does remove the small business from the detailed |
| manual records is that documents get lost which may | | | | accounting records which is a disadvantage in |
| result in profits and taxes being over declared, fines | | | | understanding the financial position. A small business |
| and penalties through inaccuracies and often when | | | | manager who prepares the financial accounts tends to |
| accounting is produced in this way it is done at the end | | | | see every transaction several times both when the |
| of the financial year purely for tax purposes rather | | | | trnasaction is made, the paperwork received and also |
| than as an essential tool of the business and that | | | | when entered in the financial accounts. |
| reduces financial control within the business during the | | | | This second view of the accounts can be important, |
| financial year to a minimum and often zero. | | | | errors in management judgement can be noted, |
| If a manual bookkeeping system is adopted then | | | | mistakes and bad practises become more apparent. |
| disciplined recording of the financial information on a | | | | Missed documents are much more likely to be noticed |
| regular basis should be enforced and regarded as an | | | | if the small business owner produces his own |
| essential function and not an administrative burden. An | | | | bookkeeping records than if the task is carried out by |
| understanding of the detailed accounting records and | | | | a third party such as an accountant or bookkeeper. |
| the effect on the business allows effective | | | | Nobody knows the business as well as the small |
| management decisions to be taken earlier than if | | | | business owner knows his own business. |
| someone else performs the bookkeeping function. | | | | The conclusion and decision each small business |
| Other alternatives include utilising bookkeeping | | | | should take is doing something. A manual bookkeeping |
| software which is effectively often a manual system | | | | system may suffice but the business may be better |
| in itself but within definite parameters to produce the | | | | served using bookkeeping software to increase |
| essential information. A bookkeeper might be | | | | financial control and performance. If the administrative |
| employed whether a manual system is used or | | | | burden of maintaining the paperwork detracts the small |
| bookkeeping software adopted. | | | | business from its main operations then an accountant |
| Using bookkeeping software has many advantages. | | | | or outsourced bookkeeping services is a logical |
| First of all any small business that has purchased | | | | solution. |