How much time should I spend on bookkeeping?Mar 19, 2019
Regular bookkeeping can make a huge impact on your business, but how often should you be doing it and how long should it take?
The answer to those questions depends on what you want to achieve from your bookkeeping and how much time you’re prepared to spend monitoring your finances.
The two most likely scenarios are that you’re looking at your books periodically (say quarterly or annually) or you’re doing them daily. In this article, we discuss the implications of each approach, and how much time you should expect bookkeeping to take.
Quarterly or annual bookkeeping
If you’re a business owner who does their bookkeeping once a quarter or once a year, it’s likely that you’re doing so purely to make the ATO happy. But, in our experience, this means the bookkeeping becomes detached from the day-to-day systems within your business – it’s simply the data entry of historical transactions for tax purposes.
Doing your bookkeeping once every quarter will mean that, for a three-month period, your purchase invoices and expenses will be piling up on your desk. You may run a separate paper-based system to monitor your credit control. Or you may simply leave it until your suppliers begin to send you reminders. Either way, you’ll need to set aside a good chunk of time to sort through paperwork each time your bookkeeping deadline rolls around, and you won’t have a clear idea of the state of your finances in the gaps between admin sessions.
When there isn’t a regular enough bookkeeping system in place, we’ve found that business owners will typically gauge their business’s success based on their bank balance, which isn’t usually an accurate reflection of their situation. If you are relying on bank balance accounting to run your business, you’re likely to feel as though you’re doing well when the balance is high and not so well when there is no money.
Approaching bookkeeping as a daily task has clear advantages for business owners – after all, if you’re at the helm of a ship it makes sense that you’d check as often as possible to make sure you were still on course. For many business owners, the barrier to daily bookkeeping is time – they fall behind on the books because they’re busy and it doesn’t always feel like the best use of their time.
The good news is that cutting-edge technology is available to minimise data entry and dramatically speed up the process of bookkeeping, making daily bookkeeping achievable.
Investing in a daily bookkeeping service moves your bookkeeping away from purely being a tax calculation exercise and provides numerous other advantages. Bookkeeping software will:
- save you time
- give you real-time knowledge of what is going on within your business and a clearer idea of how your business is performing
- let you generate profit and loss reports to see where your money is going and whether your margins are on track
- help to keep your customers and suppliers happy
- show you who owes you money and enable you to run an efficient credit control system – this can often result in you being paid far quicker and will considerably reduce the risk of bad debts
- help you to predict future cash flow
- help to reduce any tax surprises
- enable your bookkeeper or accountant to give you better support.
At Stream Accounting, our comprehensive bookkeeping services utilise cloud software to give you accurate and up-to-date data on your business in real time. Contact us to find out more.
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