Why Are Bookkeeping Systems So Important? And Why Do So Many Businesses Have Nothing In Place?
The important of bookkeeping systems cannot be emphasized strongly enough. How many times have you been into a business or rang them up and ask them for information and they cant put their hands on the piece of paper work in question. Good bookkeeping systems mean you can always find documents that you are after and never again do you ever need to be wondering ‘where is that bank statement?’ or ‘what did I do with that invoice?’ or ‘I’m sure that we have already paid that supplier bill?!’ or ‘I need to send a copy of that invoice to the customer – where is it? how can I find it?!’
What You Need Systems For
Good bookkeeping system means that you are never running around like a headless chicken. Bookkeeping systems become ever so important particularly when there are statuary requirements to be submitted. Often your VAT returns are on the basis of the records you’ve kept and you’re only going to be able to find those records if you have good bookkeeping systems and your records in order; Likewise whether your running a payroll or wages system every week or every month you need to have good bookkeeping systems in place so that your time sheets are in order and that you can find the correct amount to pay people. In addition you have to make a payment to the inland revenue for the national insurance and the tax money so you need good bookkeeping systems in place to be able to do that as well. Failure to pay the PAYE or NICs on time, can result in fines, so you need to be on top of these things.
Good Businesses
All good businesses are simply a collection of systems. Think: McDonalds and other franchise systems. They have a system for everything – from how to open the shop and sweep the floor, how to put a gherkin on the burger and how to switch off the telephone system at night. Good businesses will have a system for the marketing, a system for the operations and a system for the bookkeeping (which is one part of the finance function). Systems work together so that efficiency is created and time and money is saved. You don’t have to keep reinventing the wheel. Likewise, if you have a high staff turnover, once you’ve created an effective way of doing things – then you stick to it. There’s no need to waste time ‘thinking’ about what process again – the work flow process is in place.
Bookkeeping Systems
Bookkeeping systems comprise of two parts. The first part is the physical organisation of the actual files and folders… how you keep the paperwork. And the second part is the electronic order – and this is where bookkeeping software systems come into their own. There are lots of accounting software packages out there – some well known, some obscure, some online, some offline, some free, some expensive, some are specifically aimed at certain sectors e.g. legal or estate agents.
They key thing is to get the paperwork organised into a system which is efficient and manageable. And then to choose a software which is right for you. There are loads to choose from – and you just have to pick the one which will do what you want it to do, within your budget.
The Process
At the end of the financial year the year-end data is collected by the accountant and a profit and loss account and a balance sheet is produced. If your books & records are in good order – this makes the job and life of the accountant a lot easier and you should be charged less – because less work is being required on their part. The only way your books will be in order is if you have a good bookkeeping system in place. So a bookkeeping system will help you in long run to save money.
Tax Inspections
But, not only this. Its is very important to have neat, tidy, accessible records, on systems, because if you were ever to be VAT inspected – they can request to check back up to 6 or 7 years into your records. And if you can put your hands on what you need, and your systems bring up the information that they’re asking for – you are far more likely to have a painless audit, and for them to leave you alone in the future. All paperwork needs to have a home. When you have good bookkeeping systems in place, you will be able to sleep comfortably at night. It’s just one less thing to worry about.
Nothing in place
Business can be time consuming and hard enough without all the additional red tape and whoo-hah that can accompany everything. Often, business owners are pressed for time, and just haven’t had the time, and can’t seem to find the time to put systems in place. They’re constantly fire-fighting. Plus, if bookkeeping isn’t their strength, then they don’t even know where to begin, to know what accounting system to choose, how to set it up, how to configure their chart of accounts, what nominal codes to use, what credit control policy / procedure to put into place etc., They’re clueless, and they just don’t have the time to find out.
This is where expert bookkeeping companies, such as Boogles Ltd can be very handy, because their business is making the bookkeeping for their clients’ businesses simple. Implementing bookkeeping systems can be a one-off job, and then ongoing clients can continue with it by themselves from there.
For more information, call Boogles on 0844 8844 622 or visit: www.booglesltd.com
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About the Author:
Lisa Newton BA MSc MICB, MAAT is the author of ‘Bookkeeping Made Simple’ and various other bookkeeping books, a bookkeeping trainer and Managing Director of Boogles Ltd a UK Franchise Bookkeeping Company.
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