Bookkeeping for small businesses

Accountant & bookkeeper guides > How to do bookkeeping > Bookkeeping for small businesses

Small businesses often do a lot of their own bookkeeping at the beginning. As they grow, they offload more and more jobs to professionals. We look at how you can find a balance.

How to handle bookkeeping in your small business

You may want to do some bookkeeping jobs yourself and get an expert to help with others. Perhaps you’re still feeling your way with double-entry bookkeeping, or you’re afraid of getting payroll wrong, or you’re not cut out for chasing invoices. You can outsource any or all of those things.

We’ll look at how businesses commonly break up bookkeeping jobs between themselves and professionals.

Common DIY bookkeeping jobs

Many small businesses look after their own:

Data entry

Nowadays, software can pull transaction data from banks and read photographs of receipts, so this has become a much smaller job.

Accounts receivable

Preparing and sending invoices is straightforward if you have good templates and processes. You can always get professionals to help to chase overdue invoices.

Bank reconciliation

Most business owners take on bank reconciliation. While still not necessarily a favourite job, apps that allow you to do it on your phone have sped things up.

Accounts payable

If a business has just a few vendors and cash in the bank, paying the bills is simple enough. But professionals can really help if cash flow starts to become an issue.

Outsourced bookkeeping jobs

Even business owners who are comfortable with numbers will get outside help with:

Quality control and fix-it jobs

Bookkeepers can check your ledger for mistyped or misplaced entries, and generally make sure your books are reconciled.

Tax returns

Simple returns may be easy enough for a business owner to prepare but it’s good to use a professional if there’s any complexity. They may also find ways to lower your tax bill.

Understanding what all this stuff means

A bookkeeper can interpret financial reports for you, and tell you what they mean for your business. They can help you troubleshoot problems as well as plan for the future.

Financial reports

Income statements, balance sheets and the like determine your taxes and inform big decisions. You don’t want to make mistakes here.

Payroll

Payroll gets hard fast, so it’s a good idea to involve an expert at some point and perhaps outsource it altogether if staff numbers grow or your payroll is complex.

Hiring a bookkeeping service

Bookkeepers often allow you to choose from different service levels depending on your budget. That means you can start out with basic bookkeeping at a modest cost and add on more advanced services as your business grows. Learn more about professional bookkeeping services.

What does software do?

For most small businesses, the choice between DIY and outsourcing comes down to time versus money: Which can you afford to give up? Software lessens the blow on both sides. It automates or streamlines time-intensive tasks like data entry, bank reconciliation, invoicing and some tax prep jobs. That cuts back labour which either saves you time, or lowers the fees that you pay to professionals.

Learn more about bookkeeping software.