Bookkeeping - Can it go drastically wrong?!

[sm1]

Question for those in the know...

The general view from everyone when you talk about bookkeeping and mention that you have a bookkeeper currently doing your books is to keep it that way as it makes it easier for an accountant, less errors, reduces your accountancy bill etc.

HOWEVER, I've looked at KashFlow today and signed up for the free trial ... I have a basic knowledge of bookkeeping and on a monthly basis we have only a handful of purchases that the business makes (literally a VOIP line, call answering service, bank charges, some web design occasionally etc.) and a few customer invoices from us to our customers.

My question is: Surely if I looked after the books it couldn't go too far wrong could it? Unless I'm missing the point, is there some reason why people struggle to do it themselves properly?

Cheers :)

[sm1]

P.s. I missed out a few vital details:

- I'm the only employee of the company
- We do use an accountant so can ask them about queries
- I don't draw a salary currently
- We're not VAT registered

(even simpler!) :)

[Silky]

We've used Kashflow and found it simple enough, our issue was time and also catching up with a huge backlog. Unfortunately we presented our accountants with a fair old muddle for our first year end (sorry Jenni !!) and we've now given in and signed up for bookkeeping too, we simply don't have time to do everything and unless you're religious about the bookkeeping, you could end up paying an awful lot more to an accountant at year end to fathom it out.

Silky

[An Oasis]

is there some reason why people struggle to do it themselves properly?

Like just about any aspect in life...
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knowledge. However, I'm sure that KF is the DB's, so no criticism there.

[David Griffiths]

Bookkeeping is not difficult. When things go wrong it's normally because people are slapdash, or don't dedicate enough time to it, and with manual books they don't do the basics like adding it all up because it's too much work. That means that the accountants have to do it, and charge for it.

The key with all systems is to use the facility to reconcile the bank - that means that you balance the transactions in your records against the bank statements so that you know that everything is recorded.

With the support of people like KashFlow and your accountant, and some diligence on your part there is absolutely no reason why you shouldn't handle this yourself.

The other issue is time. Even with a good system, there is still a time commitment. Do you have that time, and even if you is that best used for bookkeeping or could you do more things in other areas of your business?

That's your choice, but should be considered

[MyAccountantOnline]

Their are many reasons why some people choose not to look after their own bookkeeping and it is ultimately a personal decision.

The main reasons I hear from clients why they dont want to do their own bookkeeping include -



The cost of buying software - whether its paying the monthly fee or buying the licence.
The time it takes - many people end up doing the books late at night or at weekends
Concerns about getting things right - especially VAT
Having to learn how to use software - some people understandably find many packages very difficult to use
They'd simply rather have someone else do it so that they can concentrate on what they do best

It is actually one of the reasons that prompted me to set up an online accountancy practice that includes bookkeeping as part of the standard package.

All that said if you are happy to use Kashflow and it works well for you that's great - Kashflow is without doubt a very well respected package which seems to be gaining popularity.

[Alison Jones]

I had clients tell me that it took them x hours to do their own bookkeeping and if they did their usual business in this time they would earn £x which was several times the amount they had to pay me to do their bookkeeping for them so it was the right decision for them not to waste time doing their own bookkeeping.

Alison

[kontracta_com]

I'd say from my experience that putting together accounts & tax from client prepared books falls somewhere in between (a) joy and ease and (b) a total nightmare. The same answer can be given for someone who has engaged a bookkeeper - be they anything from someone who is a mate to someone who has an accreditation.

It is good that you understand the fundamentals of understanding your books even if you don't keep records yourself. It can help you make business decisions of all kinds.

The actual book keeping itself, as pointed out, can turn out to be more expensive if you do it yourself as you may have actually earned more money through doing business instead of number crunching. The flip side is, your accountant may end up spending many hours sorting out some problems and your costs will rise.

After some fence sitting, all I'd say is that if you go with a computer system, talk to your accountant so you can get some advice and you can both sort out a system of working together from the onset. Ditto if you use a book keeper - in fact get all three parties together and come to an understanding.

Good luck and keep in there!

[sm1]

Thanks guys - some really great comments, I really appreciate the help.

Silky - Valid points ... having used a bookkeeper so far, everything is currently in order so that wouldn't be an issue. Also, if I do things monthly everything should be kept in check. Realistically I have no more than 15 transactions a month currently.

An Oasis - Fair enough, knowledge is the make or break in many cases... having the support of an accountant + KF support, every avenue should be covered :).

David - Thanks for the post - Agree with all that you are saying .... reconciling with the bank statement seems like an obvious 'must'. 1) You can check that all invoices have been recorded 2) You can make sure they've all been paid. Time is a good point, one which I have considered. I'm usually super keen to outsource where necessary, however I feel that bookkeeping would put me back in control of seeing a)how much is being made and b) how much is being spent. For the minimal amount of transactions currently, giving up 4 hours max a month is time worth spending. :)

Nicola - Thanks for that, some great points ... my reply to David could be duplicated here. :)

Alison - Great point! Again, my point to David about how I'm happy to spend that time and I think it would be cost effective applies :)

Kontracta - Thanks some good points :)

I think the idea of taking it on myself with the odd hour or so to start with to check the books are ok and maybe 2 checks a year from the bookkeeper would be a good idea.

Thanks everyone :D