From April 2021 the UK national minimum wage thresholds are as follows:
Most adult workers who:
This is part 2 of The Definitive Free Guide To Bookkeeping.
If you’ve not read the first part, click below:The Definitive Free Guide to Bookkeeping Part 1
In part 1 we touched on the 3 reasons people want to learn bookkeeping:
So far we’re concentrating on the first option – becoming a self-employed or sole trader bookkeeper.
Once your bookkeeping business starts to grow, there will come a time when you will have a choice to expand and take on employees.
But to make that happen, you first need to successfully market your bookkeeping business.
And in part 1, we’d just got to the point where you were having a conversation with a prospect, and how to handle that so your prospective client learns to trust you.
We’d come to the point where you’d discovered where they were right now in life, and the next part is to start to paint a picture of how their life would change in a good way were they to pick you to become their professional trusted adviser.
In every aspect of selling, this is the most crucial. That’s because our vision of the future is always based on hope (since no one can successfully predict what will happen).
We hope we can get all we want to get. We hope we can help our families, friends, and those less fortunate than ourselves.
We hope we will have successful relationships and live a long and happy life.
We hope that we will have enough money so we never fall seriously into debt or are forced to struggle to make ends meet.
We hope that we will be secure both now and especially in the future.
These are the basic hopes 99% of all humans live by.
So if you can demonstrate that even some of the above is likely to happen should your prospect become a client, then you are more than half way there.
There are of course no guarantees, and all reasonable human being understand this, but nevertheless, you can still make promises you can keep that will also impress your prospects.
A friend of mine runs an accountancy business in Peterborough, United Kingdom.
He has an outrageous guarantee. He says that if you are not 100% satisfied in the work that his firm does, he invites you to pay only what you believe the work is worth – even if that turns out to be zero.
He started with absolutely nothing. Took on a mortgage to buy his house turned office once he had generated enough income, and some 7 years later drives around in a top spec. Range Rover (and I mean top spec. – it cost over £138,000).
Although it is an accountancy firm, like all accountants, he started with bookkeeping and first principles. You can do exactly the same thing if that’s what you want.
If you take apart what I’ve just written, you will realise I’ve just given you a perfect example of spelling out a possible future.
And best of all, I’ve backed it with a true story.
Following a simple blueprint like this will help you convert more clients than anyone who does not understand the sales process (and that in my experience is most people).
But you need to know that there is no way you can help people uncover a good future for themselves if you don’t first know what it is they are after.
That’s why you always need to be listening as deeply as you can, followed up by relevant questions about where they want to be (NOT where you want them to be).
In the next section I want to talk about systems and how to take on new clients with the minimum possible problems.
Guide to Bookkeeping last updated May 2019 by Quentin Pain
Whether you want to be a self-employed bookkeeper, do the bookkeeping for your small business, or be employed as a bookkeeper, this simple guide to bookkeeping will point you in the right direction.
And it will not waste one minute of your valuable time. I want to stress that now so you know that everything you read below will help you get what you want (I’ve founded 6 businesses over the last 39 years including a successful and accredited bookkeeping service – so I understand what a big step this may be for you).
This guide is aimed at 3 groups of people:
There are many things shared in common with these three groups, so I will only point out differences where absolutely necessary.
For example, if you want to start a career as a bookkeeper, it’s a good idea to know what sort of salary you can expect (if you’re in the UK, the UK Government reckons it’s about £17-£25k, and if you’re in the USA, the last figure I have is $36k from the Bureau of Labor Statistics).
Whereas if you want to start your own bookkeeping business, you will also want to know what the current salary levels are in case you want to grow your business and take on qualified bookkeepers.
And if you want to learn bookkeeping as a business owner, then knowing what it would cost if you were to hire someone instead will help you make the decision of whether it is really worth your time.
On that last point, all businesses depend on marketing for survival. And marketing is all about time and budgets. If no budget is set for marketing a business (including bookkeeping businesses!) then it is very unlikely a new business will thrive.
Established businesses often get by with word of mouth marketing, but eventually they will decline as other rivals with a marketing plan and budget to match will move into their market.
And understanding what that budget might be just also happens to be a part of the bookkeepers set of skills. We’ll get to that later on, but for now, you will be able to see just how important the work of a bookkeeper really is.
It’s not just about adding up numbers and deciding where a particular transaction needs to be recorded in the books, it’s all about knowing how much money in the business can be used in other areas that need it.
Since the bookkeeper is the one person with their finger on the financial pulse of the business at all times, the amount of power a good bookkeeper really has becomes apparent.
This skill set has been overlooked for years by the accountancy profession as a whole, and even more so by business leaders. This is because larger businesses rely on a financial director (usually a qualified accountant) who in turn relies on bookkeepers to come up with the figures.
So it’s the bookkeepers who really know what’s going on. Welcome to the Bookkeeping Industry.
I’ve written a 5 part mini guide on this topic as part of the Accounting for Everyone Certified Online Course, which you can find here, but I’m going to include lots of tips in this article that I know will help you anyway.
These are based on my actual experience of setting up a real bookkeeping business in the UK.
Starting your own bookkeeping service is probably one of the safest lifetime businesses you can start.
The entire world is going freelance. The number of small businesses starting up is and has been increasing for a considerable amount of time, but right now it’s increasing faster than ever because everyone known ‘jobs are no longer for life’.
A university degree no longer has the benefits it used to have, and as a self-employed bookkeeper there’s no one you need to impress – your clients certainly won’t care. In fact, the debt that university students get into whilst studying has never been higher. And that is a real burden not just on themselves but on the world’s economy as a whole.
Learning bookkeeping has as a result become super important for any business owner, but since the last thing most business owners want to do is their own bookkeeping, it ends up being done by untrained volunteers (usually a family member), and that adds even more risk to the burden small business owners have to face.
And so it doesn’t take long for them to realise they need professional help.
One answer to that is finding themselves an accountant. But the problem with that solution is the increased cost. Accountants train for years, and so expect a healthy return for all that training.
A bookkeeper can become quite competent in less than a year – even though it’s the most important part of the finance side of all businesses.
This is because the tax legislation of every country far outweighs the amount of knowledge needed to operate a double-entry bookkeeping system.
There is one caveat to that: a bookkeeper must learn where transactions go in the books. They need to know the difference between a capital purchase and an expense.
They need to know the difference between selling a service and selling goods. They need to understand VAT (Europe and much of the rest of the world) and Sales Tax (USA).
But what they don’t need to know are all the tax avoidance schemes and other forms of tax accounting that reduce or avoid the tax burden. That is strictly in the focus of accountants.
And here’s the rub. The world’s Inland Revenue services are changing fast. It is no longer publicly acceptable for large corporations to use tax avoidance schemes.
It’s not just politicians who want to change things, it’s the public as well. So it won’t be long before the crackdown comes not just for all schemes, but also for smaller businesses too.
The good news, is that it falls right into the domain of the bookkeeper. A professional bookkeeper is there not just to enter the figures and make sure they go into the right boxes, they’re there to protect business owners from making costly mistakes.
At some point in the future, the average business owner will not need an accountant at all. Governments and Inland Revenue Services around the world will make online submission so easy, and the rules so hard to break, anyone will be able to file their figures online without needing a complicated manual.
But the point is, those figures will still need to be generated in the first place, and the people most qualified to do that, are professionally trained bookkeepers.
As I say, it’s one of the safest professions you can ever choose to enter, and more so now than at any other time – hence the need for this depth guide.
Starting a bookkeeping business is just like any other business. You need to register with your Inland Revenue service to let them know.
You may also need to register with them for Anti Money Laundering supervision. This all depends on your country of course. In the UK, you can do this directly, or through a professional body such as the IAB – International Association of Bookkeepers (who also operate in 60 countries at the time of writing).
It will also help you gain trust by getting professional qualifications. The IAB can help in this respect too. They also cover distance learning as well as formal college courses.
You can start your business direct from home. There is no need to increase your costs by renting an office unless a) you can afford it, and b) you or your family has a problem with you working at home.
Another benefit of offering bookkeeping as a service is you will have very few other costs other than your time. Software comes into it, but these days you will find plenty of free software for micro business books, and fairly low cost solutions for small to medium size businesses.
You will also find the larger the business you target as potential clients, the more likely they are to want you to do your work on their premises. This has ups and downs, especially when it comes to charging for your work. They will want to pay you an hourly fee. Typical hourly charges for experienced bookkeepers in the UK vary from £20 to £35.
That rate is very similar for most countries but has to be pro-rated in for that countries economy.
If your clients are happy for you to work remotely on their account, then you can change to monthly or project charging.
Another vitally important part of any small business, but extremely important for professional services such as bookkeepers, is Professional Indemnity Insurance (PII). This will cover you should something bad happen to your clients and they end up suing you for some reason.
That brings us on to contracts and terms and conditions. Many bookkeepers take on clients without setting up any formal agreements. Don’t do it. Even if your terms and conditions are simple, make sure you have some, and get a signature that they agree to them. In fact, the simpler the better.
This means setting up expectations around responsibilities. Make sure everyone involved understands who is responsible for what, and what to expect of each person BEFORE you start.
This will ensure that should you accidentally take on bad clients, you will find it very easy to exit without any impossible problems.
What are you going to call your new bookkeeping service? Names are always hard (every parent knows this only too well of course – and if this is your first business, it’s going to feel a lot like your baby – you will get very precious about it, so the name matters).
The absolute simplest name to use is your own – but if you don’t much like your name – or you want to remain anonymous, you can always use a made up name. It’s what many of the most respected authors on the planet do – so you will be in good company (it’s not weird – and you get the chance to give your baby bookkeeping service the name you always wanted).
Alternatively, you can go for a brand style name. I originally named my bookkeeping service AccountsCheap. I did it because the service helped micro businesses, and so was right at the bottom end of the market. My clients (mostly) could not afford an expensive service, so their expectation was matched to the name.
And here’s the thing about names, the perception of the name happens slowly as you build your business. The meaning of the name will be built from the reputation you establish. In other words, names don’t actually matter that much (but see my one warning below!). It’s your service that matters. This is why Google (a completely meaningless name) now has its own brand value and perception.
It’s why Apple is more associated with a computer company than a fruit in business terms.
But avoid names that are hard to pronounce or misspellings of existing words. I founded a software company in 1999 and named it Accountz. Every time I picked up the phone and gave someone my email address I had to explain “that’s accountz with a z not an s”.
You can also use your town as the name if you want to stay local. One choice of name I had was Wisbech Bookkeeping Services, which I set up anyway to increase the likelihood of being found online.
One last point on names. Sometimes they can backfire. The AccountsCheap service had an achilles heel that I hadn’t thought through properly. Given enough time, I would have stuck with it, because I know reputations take time to build, but we didn’t want to wait that long.
We discovered that clients who wanted to recommend us, had a problem with being associated with the word ‘cheap’. They wanted cheap, but not its association to their own business. So we changed it to A4Accountants, and just like that, we were now seen as professional.
I quickly got that site to No 1 in Google searches for local bookkeeping practices by putting up great content based on the fact it was a bookkeeping service and operated in my local area. You can do this too (or get help by joining my SEOExpert.help group.
The first thing to do is get your site listed on Google for Business. This is fine whether you are working from home or an office. Search for ‘Google my Business’ and follow the instructions to get your business listed.
Next, put up a page with relevant content to not just your bookkeeping practice, but also your local town. Include images of local landmarks. This builds trust (even if you are a national service).
Then schedule in a series of pages, each devoted to the different areas your business covers (both geographically as well as from a services offered perspective).
If you offer accountancy services as well as bookkeeping services, make sure you mention that. And make sure that you use those keywords enough times to ensure Google and other search engines understand what you do. But VERY IMPORTANT, don’t overuse those keywords. 2% is a safe maximum (that is, 2 in every hundred words can include those keywords).
What matters more than anything else, is the length of the articles you include. The longer the article, the more opportunities you have to influence search engines that the article is important to your industry.
Make sure you include HTML meta tags for the page title and description. This is what Google and other search engines are most likely to use when displaying your page in the search results – and of course, they are the first thing potential clients will read – so they matter more than anything else (this sort of thing is all covered in depth for complete beginners in SEOExpert.help).
There is more to ‘paperwork’ than you may think! But the most obvious paperwork is (of course!) Receipts.
That’s what we’re look at next in our definitive guide to bookkeeping. Read on.
Your Inland Revenue service (no matter where you live) demand one thing more than anything else – proof of expenses and purchases.
Since that affects bookkeepers of every kind as well as their clients (and every business in the world come to that), it makes sense to start here.
After this mini-section, we’re going to take a look at the legal side of paperwork, but let’s get back to what matters most – receipts.
For a receipt to be of value it must include the following:
Talk to any bookkeeper or accountant about missing receipts, and the most common expression you will find is ‘read them the riot act’. Which means when a client wants the professional bookkeeper to enter a receipt to claim against tax, and supplies no evidence for the purchase, it’s time to read them ‘the riot act’ so they understand that the risk is not just to them, but also to the professional.
So the golden rule in accounting is KEEP ALL RECEIPTS.
The good news though (in many countries) is that your paperwork can be kept electronically. Hard copies (ie. paper copies) are no longer needed in many jurisdictions provided a legible electronic copy exists (check with your Inland Revenue service for the law in your own country).
Some countries, such as the UK, operate this policy, but still have exceptions, one of which is the legal requirement to keep paper copies of tax related charges from HMRC (the UK’s Inland Revenue service quaintly known as Her Majesties Revenue and Customs).
And most cloud accounting software now available lets you upload electronic copies of your paperwork and attach them to the actual transactions in the bookkeeping system.
This is an excellent way to keep all your accounts in one place (make sure you keep backups though – without physical paper, you are far more vulnerable to loss).
Invoices issued out are of course where receipts originate from, and most of the same rules above apply here too.
Inland Revenue services need to see copies of invoices just as much as they need to see receipts (ie. where those invoices ultimately end up). This completes the invoice cycle, so under investigation, an auditing company or inland revenue service will be able to track the complete cycle by matching invoice to receipt.
Interestingly though, revenue services are far more interested in receipts, since these are prime documents that reduce tax. It’s helpful to remind ourselves that a receipt and an invoice are the exact same thing (the only difference being that an invoice may be unpaid, whereas a receipt is always paid).
Every professional bookkeeper (or accountant) needs certain documents in place – and for many reason including legal ones.
Here’s a list of the most important:
There are plenty more documents you might want to use in your bookkeeping or accountancy business including employer’s liability insurance if you have staff or deal with members of the public face to face, but the above 3 are essential.
Without clients for your bookkeeping business, you don’t have a business. So let’s take a look at some proven ways of doing this most important of all marketing tasks.
The fastest way to get clients is to contact every accountancy practice in your area and let them know about your bookkeeping service.
If there’s one thing accountants are not keen on, it’s doing the every day tasks of tracking down receipts, tying them up with transactions, and entering those transactions into whatever bookkeeping system the client has chosen.
Accountants are far more fond of figuring out how best to save tax or make the business look great to investors. That’s what they’re trained to do, and that’s what earn them large fees.
So if you can take away some of the burden of bookkeeping, they will thank you for it.
The only downside is the fees you will be able to charge them. But, you don’t necessarily have to be the cheapest in town, provided you can show them these three attributes:
The most important thing to an accountant is your accuracy. A badly prepared set of books will cost them in potential litigation (and you your job), so accuracy and detail is imperative.
If you can also prove you work fast – because you know what you’re doing, then you’re most definitely worth paying more for.
And finally, getting qualified is simply due diligence as far as the accountant is concerned. Even if you’ve been a bookkeeper for years and know what you’re doing, but have never bothered getting the certificates that prove it, definitely go after them now. Especially if you’re going to contact accountants as your first port of call.
The second easiest way to get clients is to do a flyer drop. This will take considerably longer. This is because at any one time, there will only ever be a handful of people in your neighborhood who need a bookkeeper – and when I say neighborhood, I mean 10,000 houses!
Look for houses that show the owners are not the poorest in town. So pick the more well off looking streets and if you’re going to deliver the flyers yourself, here’s what to look out for:
The third way is actually the best of all, but it’s also the toughest, so few do it. It’s using the telephone (yep, we all hate it). But it works. Here’s what we do:
The fourth way is join your local business networking groups, but I can tell you from experience, this can take a very long time to work. People have to get to know, like and trust you before they will recommend you.
But once you get a client or two from a group, those recommendations will come thick and fast. My own bookkeeping business exploded this way, but it took a year for that to happen.
The fifth way is to offer yourself up as a speaker to local business groups. This is also a supreme way of getting your message spread. Remember that for talks like this you are NEVER selling your service, you are selling yourself as a person who knows what they’re doing and can be trusted.
The sixth (and perhaps most important method of all) is via your website. If you haven’t got one, get one. You can set one up yourself these days for free using WordPress.
But simply putting up the site won’t do anything at all. You need to promote it, and the best way to do that is through Google My Business by adding your site as a business, so Google can start displaying it to anyone searching for a specific business in a particular area.
Don’t be frightened of doing this yourself if you’re not a techie. It’s easy and Google give you complete guidance.
The last method I would recommend here for now is to use local advertising. You MUST have a good budget for this to work.
The ad does not need to be large, just the smallest display ad – or even a simple text ad will do.
But what matters most is continuity. Be prepared to advertise for 6 months. It will take that long for your ad to become familiar to the papers readers.
The more they see your ad, the more they trust you – even though they have no idea who you are.
Pick any one of the above and master it before moving to another. One (or many of them) will work for you. How do I know? Because all of them have worked for me (and when you think about it, there’s not many other ways left that businesses use to get more customers).
You’ve attracted the clients, now how do you sell your service to them?
Every professional telesales consultant I’ve talked to says the same thing: “use a script”. But experience has shown me there is no way to write that script until you have had many conversations with your target audience.
This is why it matters hugely that you pick a specific industry to talk to and not go for ‘everyone’.
If your service can be used by everyone, great, but so can everyone else’s, and that means you won’t stand out.
So pick one specific industry and get to know it as well as you can – and the best way I know of doing that is to actually go and talk with people actively engaged in it.
People are always happy to help those looking for knowledge (and not trying to sell themselves!), so your questions will be welcomed.
And from that you will soon learn what matters most to them.
And from there, it becomes easier to start new conversations with prospects about their real needs.
For A4Accountants, we chose the hairdressing and beauty market to start with. I met someone who ran a beauty and hairdressing boutique at a local network meeting and arranged to have a coffee with her (which is normal practice in network meetings).
I was able to find out not only the problems of running such a business, but also how she dealt with the individual sub-contract/self-employed hairdressers that worked in her shop.
And from there, we were able to start figuring out a marketing plan.
We started by scraping the internet for local firms in that industry. There was a surprisingly large number of them. I knew that just one contact could yield 6 more who all worked in the same place (all would be sole-traders).
Then we sent letters to each contact we got. After a few hundred letters, we realised this was not going to work for this industry (we tried two different forms of letter – long and short).
So we went straight to telesales. This was always a part of the plan, but we’d looked upon telesales as the 2nd step.
It turned out that phoning cold was the absolute best thing to do. At first we had the excuse of the letter we had just sent: “Hello, I’m wondering if you got my letter about our new bookkeeping service? No?, OK, we offer a service that starts at just £xxx for someone in your profession. Would that be of interest?”
After a while, we changed the script slightly, so we didn’t need to mention the letter at all – because now we weren’t sending one.
We got a conversion rate of 10% from cold call to interested to hear more. And from that we converted around 20%.
So for every 100 people we contacted, we got 2 new clients. If we had just sent the letter, it would have been 1/10% (1 in a thousand) – with a massively higher cost overhead.
It could be argued that we didn’t test enough letter combinations out, and I’m sure with enough time and money we could have improved things, but we hit upon a better method quickly, and that’s what we wanted.
Cold calling costs nothing but time if you have a free call plan. And follow up letters to interested parties is then far more cost effective. We followed up the letters with another call (having already got permission to do this after the first call).
You can easily bring in a new client a week if you’re just on your own using this method. So in a year, you will have a very viable practice. And once you hit a certain number of clients, you will find referrals coming in faster, so you can start cutting down on cold calling (unless you want to expand of course).
The next step is meeting (or calling) your prospective client.
It’s all about trust. They must trust you 100% because if they become a client, they are going to need to reveal everything about their financial affairs to you.
Put yourself in their position. How much of your own affairs would you be willing to tell a stranger?
Now let’s put that into perspective. By the time it comes to a conversation like this, they will already know what you do – and what they want. So the ice is broken to some extent.
But, you will still need to probe deeply into their financial affairs – as well as their business affairs, so put yourself in that position, and think about what sort of questions you would be willing to ask if the roles were reversed.
Of course, you are very different from your clients (as is everyone – we’re all different really), so you need to think about how empathetic you are. How easy is it for you to see another person’s point of view?
When you’re watching a film, do you often side with the hero (or villain)? Or are you largely agnostic to the feelings generated by the script?
If you’re a very empathetic person, you will find aligning with people easy, and winning trust is simple for you.
If you’re not, then that’s fine too. You must just ensure you keep your own values to yourself or you run the risk of alienating your prospect before you have even found out what they want.
And finding out what they want is your top priority. This is VERY different from what they need.
You can weave in their needs to their wants once you know what it is they are after.
And that leads us to the most important point of all about selling.
It’s all about the future.
Everything that drives humans forward is about the future. Hope is what we have to keep up motivated.
Think about those two points carefully. Future and Hope.
We will also do things because of the consequences that would happen if we don’t – but either way, it’s about the future. Is it painful or pleasurable?
This is what wants are all about.
To discover someone’s wants, you need to start with asking where they are right now in life.
Do they hate bookkeeping. Do they hate submitting year ends accounts. Are they ignoring the things they must do, and if so, why?
Once you’ve defined their current position – using their own words – which means you must listen carefully to what they have to say, then you’re ready to help them reveal their future.
Speaking of which, we’ll get to that in the next episode, which you can find here:
The functions of a bookkeeper may be many and varied however there are a few straightforward procedures that every bookkeeper will know about such as recording, balancing and securely filing financial transactions.
Small business owners who are just starting out are often led to believe that they need to employ a bookkeeper in order to maintain their financial records. However if you learn about what you need to do yourself you can often do a large amount of the basic information inputting yourself and may only need to hire a bookkeeper or accountant as you come to file your information with the IRS in the USA or HMRC in the UK.
It might be helpful to compare and contrast what an accountant does to help you to see the role of the bookkeeper. Accountants tend to use the data generated by the bookkeeper to show subjective insights into the functioning of the business. The bookkeeper will create accounts from the raw data provided during the financial business life of the company as it goes about trading. The role of the bookkeeper, therefore, may be seen as a more administrative position. The accountant will analyse that information and provide insights into the company that the bookkeeper would not perhaps normally consider. The accountant would also be the person who will help with strategic tax planning and financial forecasting. She would do a meta-analysis of the business and her knowledge will bring in aspects other than the more fundamental daily transactional business activities that are the territory of the bookkeeper.
Bookkeeping involves recording transactions in a consistent and rigorous way. The bookkeeper will follow a strict procedure and in this way she will create a file which, on paper or in a digital format, accurately represents the actual financial business dealings of the company. The bookkeeper will log and add supporting information and notes to debits and credits (incomings/outgoings). She will issue invoices, perhaps do some or all of the payroll activities in the business and she will organise and update historical business information and work on the ‘general ledger’ to ensure its accuracy and coherence.
The ‘general ledger’ is a written, detailed account of what the business is spending and earning. A bookkeeper will add in data (called ‘posting’) to the general ledger. For instance when a sale is made the ledger (which may be an actual physical paper file which is updated or a computerised accounting software package) is adjusted to add in the new cash input. When an item or services are purchased the ledger will be updated to reflect the new expense in the records. One critical funtion of the bookkeeper is to check and maintain the balance of the account e.g. what has come in, what has been spent and what, now, is the actual balance of these (on paper) mathematical activities?
The bookkeeper will use differing methods of recording the data according to his preference, the way the company specifies it or the system has been set up. Some people use simple paper ledgers (as discussed above). These days most people opt for using computerised programmes that will also work out the totals of the incomings and outgoings for you. Spreadsheets can also be used to log the data or it may be that parts of the accounts are done on paper, some in a spreadsheet and some using a dedicated software package. The bookkeeper will need to track what’s happening in the business finances however this is done.
If the bookkeeper is the business owner and is a sole trader he will have a wide variety of tasks to perform. He will need to work on all the invoicing and payments as well as creating the financial statement at the year end (with or without the help of an accountant). However if the bookkeeper’s role is to work in a specific department within a large company he may well have just one specific function for which he is wholly responsible (e.g. purchase ledger (which means to check on all the items bought by the company and follow up on the payments made and organise everything to do with that)).
Whatever size of business you work in a bookkeeper’s role could involve reconciling the bank account. To do this you will need to view the transactions that have appeared in the bank and log those against what is going on in the daily business. You will then be in a position to alert the business owner if the bank account is likely to need more funds (e.g. if it might become overdrawn/exceed the overdraft limit). Reconciling the bank account means marking what has come into or gone out of the bank compared with what you have noted in your accounts. By reconciling the bank account you then know which are the outstanding invoices and payments that you need to chase up.
The bookkeeper’s role is to keep his accounts according not only to basic bookkeeping principles but also with regard to the company’s rules and specifications and most importantly following legal requirements. If in doubt the bookkeeper should refer to HMRC or his local tax consultant. A bookkeeper will need to bring to light any practices which could lead to errors in the business books and then work with the business managers to rectify the system and update any official bodies and so on. Mistakes need to be put right as soon as possible to avoid penalties which could further impact company finances.
The bookkeeper will need to have great data entry skills and thoroughness. She will need to have a head for figures and double check her work at all times. She will know what is happening in the monetary core of the company and be discrete and keep the information safe and away from third parties. Confidentiality will be maintained in everything she does. Her filing systems will be orderly and also updated as and when for instance when data needs be destroyed once it has served its purpose. She will also make sure that the relevant information is never deleted or corrupted.
The function of the bookkeeper could also involve recording the value of property and other financial fixed assets. He or she may also take on further responsibilities such as chasing up late payments, purchasing (buying) and generally constantly working to become increasingly efficient so helping to improve the profit of the business and contribute to the net income or the ‘bottom line’ (the actual money made after all the sales and expenses have been calculated).
A bookkeeper will work according to a number of rules that are generally the same no matter the nature of the business. Almost every type of business entity in the world will need some sort of coherent and clear system which shows the financial transactions and therefore whether the company is making any money or not. Bookkeeping, therefore is a fantastic profession to persue and is one of the most versatile career paths you can follow.
Bookkeeping principles are rules that the business accountant or bookkeeper follows in order to create accurate records of the business’s financial activities. A bookkeeping system tracks money as it flows in and out of the company in the form of income or expenses. The data generated shows you how well your business is doing. Bookkeeping principles tend to be the same whether you record the data on a computer or in written format.
Basic bookkeeping principles need to be understood by anyone who is running a small, medium-sized or even large company since they are the means by which you will understand exactly what is happening in your business – even if you are not the one doing the books.
If you can see the basic business cash balance and understand the way that the accounts are organised to show the reality of the company finances you will know whether you have a healthy or a failing company and therefore what, if any, action you need to take.
Bookkeeping principles follow some very standard rules. There are daily information logging procedures that every bookkeeper will practise. Get to grips with these and you will always have a good working knowledge of what’s going on in the business.
Every bookkeeper will make what are officially called ‘Journal Entries’. These are really only formal written records of the money coming in and the money going out. So, for instance, when you sell something you will log that cash income. When you buy goods or services you will also be making a record of that money which is flowing out of the business.
When you report your financial activities you may use one of several different accounting procedures. You will use either accrual or cash accounting. If you follow the accrual method you will be reporting on the money you are owed or have not yet paid. So you are reporting on what is still to be claimed or spent as if the transactions have been finalised even though they have not. In the cash accounting method you report on the invoices that are actually paid (e.g. you have received the payment and it is in your bank account) and the bills that you have paid (e.g. the money for the expense has left your bank account and the payment is totally paid up). Whichever method you use will depend on your business and how you choose to account for it but you, as the business owner will need to understand which procedure you follow.
When you are working on your accounts you will be using double-entry bookkeeping. For a complicated-sounding name really this only means that for each thing you buy or sell you will need to record where the money came from and where the cash is going to. The ‘Credit’ or where the money came from, would be for instance, say you sold a product to a customer in a shop, the money would come ‘From’ cash given to you by Mrs. White. The cash would go ‘To’ or ‘Debit’ the bank account. If you did not use double entry you would have random transactions e.g. Mrs. White gave you £10 / $10 and somewhere else in your accounts you have have £10 / $10 being deposited in your bank account but we would not know how that money came to be generated. The ten pounds does not magically appear in an account; it was a payment for some thing. A double-entry system is designed to clearly show where the money you place into the bank account came from and how it was generated.
Similarly things that you purchase are made as double-entries too. So, you use part of the £10 / $10 you had earned from that previous sale (from Mrs. White) to buy an item. You say the money came ‘From’ the bank account (a ‘Credit’ in this case) and went ‘To’ (a ‘Debit’) the cost of the thing you bought. If you can understand double-entry bookkeeping principles you have pretty much the basics for any accounting system be it kept on paper or in computer software.
When running a business you will need to grasp the bookkeeping principle of cash flow. In a nutshell you can’t spend what you have not yet received in payments. Or you can, but you may incur debts that could destroy your business completely. Cash flow is all about the movement of the monies into and out of your business bank accounts.
Once you have grasped the basics of double entry and cash flow you will need to understand the profit and loss account. Here you will see the total amount of money you actually received and then the total amount of expenses that you accrued in order to run the business. Hopefully you did not spend everything you earned and you have made an excess of money, a profit. This is a snapshot of your business as at that date.
There is one more area that you will need to account for in recording your business transactions and that is your liability to pay any tax or VAT. In order to do this you will need to create a ‘tax’ or ‘VAT’ account. Your company will accrue taxes with just about every transaction made and you must keep strict records showing what you owe. It is good practice to put the owed monies aside so that you have the funds available without fail when they become due either quarterly or annually. You should always fill any tax forms out accurately and pay any taxes or VAT payments on time.
Bookkeeping principles have not really changed much since the very first accounting records were made. Once you have become familiar with the above terms you will have come to understand almost all of the elements for doing your bookkeeping. The principles apply throughout the world and follow a common-sense pattern which has simply been formalised and been given jargonistic terms.
In this in depth article we look at all the basics you need to be aware of to set up your home based bookkeeping practice.
Anyone can start a bookkeeping business from home. Amazingly, you don’t even need to be qualified, though it does help!
To give you an idea of what it involves once you are up and running, the average number of clients per bookkeeper is around 30. This makes it fairly easy to figure out how much you will need to charge for your services. In very simple terms, decide how much you want or need to make a year, then divide it by 30. You now have your cost per client.
The next important point to consider is the size of business you want to target. The larger the business the more work there will be. Larger businesses will want more analysis, and although that analysis may not be done by you, the bookkeeping will become far more involved and therefore time consuming. Accounting for items when they are actually consumed, rather than when they are paid for, means extra accounts and more transactions (insurance spread over 12 months but paid for in a single sum for the year is just one example).
So, if you are just starting out, target micro businesses. That is, those with a staff count of less than 5 including the owner(s). The turnover is not that important, it is the number of transactions and the nature of those transactions that matter.
You are not competing with accountants here. That is probably one of the main things to understand. Accountants are your friends. They can actually give you loads of work if you are struggling to find your own clients. Accountants do not like bookkeeping! Their work is in interpreting the books, advising about tax, and preparing statutory accounts for the Inland Revenue.
Another important thing to remember is to keep your overheads to the minimum. Setting up your bookkeeping business from home is the best and simplest answer to this. It also means you can claim expenses from your household costs. If you have 6 rooms in your house and you use one of them as your office, you can claim back 1/6th of many of your utility bills (eg. electricity and gas).
You could also claim back 1/6th of the interest on your mortgage if you have one, though be careful of capital gains tax if you should subsequently sell your house. Take advice from your own accountant in this case (if you take on freelance work from an accountant, you will find they will be more than willing to help you out with advice in this area).
In part 2 of this article, we will give you a step by step guide on how to start your own bookkeeping business.
You can choose to be self-employed or set up a company. This is a simple decision. Self-employment is the way. The reason is that you will not have to pay tax until much later. That is really important when you are starting a new business. Cash is king as they say. Whilst you build up your client list, you need to conserve as much money as possible. If you were to form a company, any money you pay yourself in remuneration you will need to pay tax on there and then.
Another consideration is why you would want a limited company. If you were a retailer or someone supplying and selling other people’s goods, then a limited company is probably vital. You will be buying these goods on credit, hoping to sell them to make a profit. If, for some reason, the goods do not sell (maybe a competitor our prices you or a better product comes along) you may have to sell them at a loss. You could end up losing not just money, but your house! If you are self-employed, that is exactly the situation you do not want. Whereas selling a service such as bookkeeping, involves mostly your time.
The next thing you need to consider is your trading name. You have two choices here:
1. Use your real name
2. Make up a name
Both have pros and cons. Using your real name will invoke trust. You are displaying a degree of confidence in that you are happy to be exactly who you are. On the other hand, creating a trading name will let you advertise what you do. For example, ‘ABC Bookkeeping Services’. However, the best way is to combine both concepts. If your name was June Smith, then name your business June Smith Bookkeeping Services. Perfect. You are saying who you are and what you do in one go.
Do you need a logo. The simple answer is NO. Don’t waste your money. Your logo will be meaningless to most people unless you have a huge marketing budget, and even then you would be wiser to spend that budget on selling your services not your brand. Yes, so many marketing gurus talk about brand being everything, but it is a waste of time, effort and money for something as simple as a bookkeeping service.
So, your name IS your logo. Choose a classic font everytime you use it and people will remember you. Do not use any fancy fonts. It must be legible and clear. That is all you need to know about logos.
Now, what for most people, is the hardest part of all. Getting customers! It is the same problem for everyone. Where are your customers? Well I can tell you exactly where they are: everywhere! The fastest route is to contact all your local accountants. More and more businesses are starting. There is almost an exponential growth going on. In these recessionary times, people (like yourself remember) are thinking about an alternative to the 9-5 job. And what is the first thing they need to do? Ask questions, get advice and maybe get some training. Part of the group of people supplying those services are, you guessed it, accountants.
Open a spreadsheet (or a notebook) and start with the Yellow pages. Enter the contact details of all your local accountants. You could also include bookkeepers. They may be in competition with you, but if they are overstretched, it may just help you get started. You may have to accept slightly less money, but it will get you on the road to success.
First off, write an introductory letter. I have found in business one of the most powerful words is ‘introduce’. Your first sentence should say something like: ‘I would like to introduce myself to you. I am June Smith, and offer a local bookkeeping service to accountants’. For this marketing letter, the accountants are your target market, not their clients. You do not need to say too much, certainly do not mention pricing, but say you would be happy to arrange a visit to talk about the posisbility of working with them. End with a call to action, such as ‘I will telephone your office in a few days to arrange an appointment if that is OK with you’.
Now, there is one more vital thing. Experience. Do you have any. If you have years of experience, say so, eg. ‘I have 20 years bookkeeping experience to TB’ – feel free to use abbreviations like TB for Trial Balance, you are speaking your target markets’ langauge.
What if you have no experience. No problem, you will have taken some bookkeeping course and have a qualification right? (if not, do it, you will find it much harder otherwise). So now the line is ‘I am a fully qualified bookkeeper to level 3 and a registered member of <insert some bookkeeping association here>’. That should do the trick. If you have experience and qualifications shout about both of them. Anything that can add trust will win you clients – and it makes no difference even if you are running a bookkeeping business from home.
Send your letter. After a day or two (do not leave it too long) if you have heard nothing back, telephone your list. Persistence is everything. When you phone, ask them about their business. Don’t talk about your own unless they ask. Make them feel you care. Ask them what problems they have with bookkeeping. If they give you any indication of a problem, jump on it and say you can help them.
Follow these steps methodically and you will start to build your client list.
In part 3 we will talk about going direct to clients. Far more lucrative, but requires more effort, as you would expect of any business.
By far the hardest way to get clients is to try to attract them directly. Having said that, it is really easy to find them! the hard part is getting them to give you business. and if you really want to set up a bookkeeping business from home and make it work, then you are going to get this aspect nailed!
Your first problem is convincing them that you are trustworthy. After all, you are going to be dealing directly with the finances of their business. Ask yourself this: would you trust someone you had never met before with looking after your money? No? well there you have it!
So, how do you overcome this. The simplest answer is in how long you have been established. If your sign says ‘Established 1980’ great. You must be bona-fide, the problem is, you haven’t even started yet! (that’s why you are reading this, right?). So, what to do.
Basic Marketing Checklist
1. A real postal address. Do not use box numbers.
2. A landline. Always have a landline.
3. Always use your real name for the business (see part 1)
4. Qualifications and member of bona-fide bookkeepers association
5. Professional stationery. Business card, letterhead and compliments slip
6. Always dress professionally
A real postal address lets your potential clients know you are permanent. A landline really adds credibility to this. So many service businesses start up using a mobile number. But for a business thinking about outsourcing its bookkeeping, a mobile is just too, well… mobile! Don’t use free or premium numbers either. You are aiming at a local market, so give them a local landline. Business owners want to know where you live. They want to be sure any paperwork they give to you is safe. Freephone numbers are terrific for established businesses, but for new businesses they are a hindrance. It suggests you are not local. And not local implies you are not really interested in local business.
Your business name is vital for establishing credibility. Would you use a firm called ‘ACME Bookkeeping’ or ‘James Smith Bookkeeping’. See part 1 for more on that.
Qualifications are also absolutely vital. It’s the same thing again. Put yourself in the shoes of your clients. If you mess up their VAT, it is they who suffer the consequences, not you. So would you entrust your bookkeeping to an unqualified person?
Become a member of an established bookkeepers association. Make sure they have a code of conduct. Advertise that fact on your stationery, website and advertising. Advertise it on any sales letters or handouts you produce. Use the associations logo and any other marketing material they can provide.
Make sure your stationery is designed by a professional designer. Do not make it fancy. You must be seen as a safe pair of hands. Do not design it yourself to save money (unless you happen to also be a designer of course). Your image must be professional and simple. Do not use tag lines. Eg. ‘Bookkeeping to die for’! Let your business name and stationery design speak for itself.
If you get an appointment to visit a client, always dress smartly. You are a professional. They are trusting you with a very sensitive part of their business. You will probably be the first to know if they have problems or are making a success of their business. Your confidentiality is vital to them. Show them you are professional by dressing appropriately.
In part 4 we will talk about getting new clients. If you haven’t signed up to our 12 week certified bookkeeping course yet, click here.
By now you should have a good idea of how much to charge, how many clients you need in order to be completely independent, how partners can help you, and why your image, from your business name down to what you wear is absolutely vital. So, let’s put it all into practice and go win some clients and make your bookkeeping business from home really fly!
But first a note of encouragement. Once you get a few clients on board, you will find that they start recommending you to other business people they meet. So although you need to get on the first rung, after that it should be plain sailing providing you follow the advice in these guides.
Here’s a great question: How many cars do you see driving around in your local area with a sign on the side or back that says ‘Local Bookkeeping Service…’? None right? So go to a sign maker and get some magnetic car stickers made. That way you can remove them whenever you need to (eg. if you sell the vehicle).
The message on the sign must be absolutely clear and simple. Since you will be displaying the sign in your local area you can use your business name ‘Jill Smith Bookkeeping Service’. It is absolutely vital you put your landline number on there too. The STD code also tells people you are local. You will also need a simple selling slogan. Eg. ‘Best Rates in Town’. It sounds corny, but if someone is looking for your service, they need reassurance they are making the right decision, and ‘best rates’ works. So you will end up with a 3 line ad:
The text must be legible at a distance. Do not use fancy fonts. Simple is best and works. Make sure your landline forwards calls to your mobile when you are out (or your partner is aware they will get calls if they are in).
Advertise in your local newspaper. There is usually a section for local services. You may see competitors in there, so all you need to do is study their ads and look for their weakness. If they offer ‘Established 1899’, make yours ‘Modern Fast and Friendly Service’. Or you could counter it with ‘Fully Accredited’ if they do not mention that. Look for what they have missed off and highlight it in your ad. You will find that these people only advertise occasionally (as you will also do in time yourself) because most clients come from recommendations.
After you advertise, contact that paper’s editorial staff and offer to write a piece on small business and how to succeed. Make it relevant to the readership. Do not ask for money, offer it free. It should be helpful to small businesses, not about bookkeeping. You are gaining trust with pieces like this and gaining credibility as an expert. If you can get a regular spot, in 6 months, you will not be able to stop the stampede.
Produce a hand out. Drop them in letterboxes. Ask if your local library would accept them in their local services section. They will display them if there is value in the leaflet. Eg. ‘How to do your bookkeeping’. Contact your local chamber of commerce. They may want you to join, but you do not have to. They are there to promote local businesses and you offer a service that will help local businesses. Explain that and they may help. Contact all local networking groups and attend their breakfast meetings. If you get the chance of a 5 minute speaking slot, grab it. All you need to say is that you are a local bookkeeping service, fully accredited and qualified and charge the best rates, come and see me afterwards. Once you have done that a few times, you will find it easy. It will also help with your confidence when meeting other business people in any context.
There are many more ways to promote yourself and your business, but follow the above as a starter and you should have no problem getting your business started and growing it rapidly.
In part 5 of this course we will look at how to keep your clients and meeting deadlines.
Getting clients is not too hard as you have already seen. Keeping them is actually very easy too. But you will lose them rapidly if you are not punctual. If they ask you for their VAT return and you do not return the call quickly, they will start to lose faith in your service, and then in you. So it is vital you set out your terms and conditions at the start and stick to them. Your clients will respect you even more if you have a set of terms and conditions. It is the professional thing to do. If you belong to a bookkeeping association, they will not only be able to provide you with guidelines, they will also have a strict code of conduct. Use that to your advantage. State it clearly on your marketing materials.
Things to include are:
This list is not exclusive and you should contact a solicitor to make sure it is water tight and you have not missed anything out. Remember UK law is ‘case law’. That means each case has a possibility of changing the way law is interpreted. If you should ever be taken to a small claims (or larger) court, the judge will always look at things from a ‘fair’ point of view. For example, if your terms and conditions state that you are in no way responsible for anything, the judge will not view your case kindly!
Some countries impose regulations on money laundering (following the terrorist scares of the last decade). In the UK for example it is necessary to register with HMRC if you offer bookkeeping or accounting services to other people. There is a charge involved for this, so please check with your Inland Revenue service. Some bookkeeping associations cover this cost as part of their membership (which can often be cheaper than registering independently).
To ensure you keep everything up to date and you do not miss deadlines, open a spreadsheet and record your client details together with when you expect to receive and deliver paperwork, tax returns etc. Do one for each year. You could open new worksheets in the same spreadsheet, which will give you quick access to previous years.
Make sure you get all your client details including main contact, address, telephone numbers, who is responsible for delivering paperwork to you, who is responsible for paying you.
Add a date for each client to contact them on a regular basis so both you and they can discuss any issues that have come to light. Always do this. That call can really help your relationship. Your clients will know you care about their business. Of course, if your client runs the entire business on their own, then this wont be necessary as you will be in regular contact anyway.
OK. That completes this mini guide to setting up a bookkeeping business from home.
We have published a series of marketing articles to really get your business noticed online. It is much easier than you think, so whatever you do, do not spend a fortune on internet marketing or even starting a web site until you have read these articles. I can pretty much guarantee that if you follow them your site will get to page 1 of Google for a very relevant keyword in your target area, and the cost of doing that will be minimal. You can find everything you need on QuentinPain.com
If you would like to join our 12 week certified bookkeeping course CLICK HERE.
And finally a little video on profit, gross profit, net profit and EBITDA:
The bookkeeper has a responsible position in society. She tracks the flow of monies that come into and go out of companies and businesses. The work of a bookkeeper is necessary so that interested parties can understand the financial status of the business at a glance. A bookkeeper is a powerful person and must work to the highest ethical standards. The role of the bookkeeper could also involve working on a company’s tax obligations and so there is often a legal aspect to doing the job. If you work in payroll as part of your bookkeeping role you also have a huge responsibility to organise people’s wages and therefore livelihoods. If you create invoices and organise paying the bills then you will understand that you need to be honest, up-to-date, accurate and quick to spot mistakes and put them right if you are to be an ethical bookkeeper.
Bookkeeping ethics are all about truthfulness, being careful and diligent in all you do, not just in your bookkeeping. A bookkeeper has a trusted and respected role. There are bodies such as the International Association of Bookkeepers (IAB) and the Institute of Certified Bookkeepers (ICB) which state what behaviours are appropriate for bookkeepers. These behaviours are listed below along with generally recognised appropriate actions that bookkeepers will need to take in order to uphold the good name of the profession.
When you are a bookkeeper you will need to conduct yourself according to the rules and ethos of the professional body to which you belong or the company which employs you.
Bookkeepers should at all times only engage in activities which will not bring themselves or their peers or employers etc, into disrepute. For instance committing any criminal offence (maybe apart from some road traffic offences) would usually be enough to get the member struck off the official list of practitioners. It may tarnish the good name or reputation of the institution or the company the bookkeeper works for and is considered very serious. So being a good bookkeeper means behaving appropriately in your private as well as your professional life.
Bookkeepers should only ever be honest and scrupulous in their dealings. For instance members of the IAB and ICB are not allowed to engage in dishonest activities even if they’re unaware, which means due diligence in taking on clients is of the utmost importance (especially important with internationally recognised anti money laundering legislation). Also members of any professional organisation must always adhere to their strictly professional standards and are not permitted to ‘cover up’ any illegal or corrupt procedures, even if this would mean upsetting the business relationship with a client.
As an ethical bookkeeper you would never take on any work that you know you could not complete for whatever reason (e.g. if you might run out of time and be unable to finish the job). An ethical bookkeeper only takes on tasks that they can do and are qualified to do. As a bookkeeper you have a duty to protect the client’s information (save in a criminal case where you might be required to pass on details). The ethical bookkeeper has a duty of care over the files and documents they are checking, creating and logging. Files, documents and receipts/paper trails of the employer or client must be securely held at all times. Digital files should be encrypted as should digital copies of those files. Physical data should be stored in locked areas and access strictly controlled to safeguard all parties from theft or the disclosure of sensitive company data. The role of the bookkeeper goes far beyond the mathematical aspects of data creation.
Bookkeepers should only ever keep accounts that accurately reflect the reality of the business they are keeping the records for. They are in a trusted position and need to be clear and concise about the trading activities of the company. A bookkeeper will at all times need to be polite and courteous and any advice or information imparted to clients should be right and also easy to understand.
The ethical code of the bookkeeper also ensures that he or she would always disclose if they had an interest in the work they were employed to do. In this way they protect themselves and their company from potential charges of not working in clients’ best interests.
If you are a member of a professional body as part of your bookkeeping practice your subscriptions should be up to date and any CPD required should be recorded and logged for future reference. Insurances should be promptly paid and in line with your work activities. You would also need to update your employer or professional institution with any changes in your situation such as a house move.
A bookkeeper should follow company procedures. He should be loyal, keeping financial matters confidential. He should make sure the accounts are in a safe pair of hands. If in doubt he should check with his manager. A bookkeeper has a responsibility to report if he is asked to do something he doesn’t think is ethical. He could speak to his manager or someone in the company who deals with such complaints.
In answer to the question ‘what are bookkeeping ethics’ we have covered personal responsibility as well as having a regard for the business which we are employed by. If you work for yourself and are your own bookkeeper you need to be just as rigorous as if you were working in a large company. The basic rules are straightforward. Report accurately what your business is doing. Liaise with the relevant departments or legal entities if you need further support or information and if you make a mistake rectify it transparently and as quickly as you can. The ethical bookkeeper will store sensitive information securely and only pass on data to relevant third parties as and when and according to the local legal system. A bookkeeper has a duty to do the right thing and take steps to put things right when something goes wrong (which does happen). The bottom line is that the bookkeeper is honest and accurate. Everything else will follow from working to this basic ethos.
The tasks a bookkeeper needs to do may be highly specific or they may be extremely varied. A bookkeeper’s day-to-day tasks will depend on if he is working for a tiny start up or a major global company. For instance at the very basic level the bookkeeper will need to log all incoming and outgoing transactions (together with the ‘evidence’ – the paper trail of receipts, invoices and other material). She may also need to create the system itself if the company is just starting out and/or prepare VAT returns or sales tax information. In such a business, the bookkeeper will most likely be required to do a wide range of differing tasks. However if the role of the bookkeeper is to work with a large number of peers in a huge company he may be needed to focus on one specific area and become an expert in that. In a nutshell the role of the bookkeeper is to organise and produce information essential to the financially healthy running of the business.
The tasks of the bookkeeper include things which are done daily, monthly as well as quarterly and annually. Daily tasks involve checking the petty cash, logging and preparing invoices (plus storing these in a paper or a digital and secure filing system), paying bills and raising purchase orders as well as updating the payroll information. The data should be recorded using either computing software (such as Accountz.com, MYOB or QuickBooks) or some other format. Some companies use spreadsheets to log the data. In a few cases the information is recorded in journals – literally written down in specially ruled books. However you do the books you need to be accurate and diligent in keeping up with the daily tasks. Some bookkeepers use a checklist so that at each day, month, quarter and year end they have fulfilled their requirements.
Depending on the company requirements monthly duties could involve an analysis of the month’s overall profit and loss standing as well as double checking the figures ready for the quarterly tasks which may involve the quarterly sales tax payments or income payments. At least once a month the bookkeeper would need to oversee the invoices – are they all paid? Do reminders need to go out?
At the year end the task of the bookkeeper will be to complete the year’s trading figures ready to send on to the accountant for her information. The bookkeeper may also need to conduct stock reviews especially at the year end in order to account for the expenditure of the company and so that the value of goods that remains within the business can be verified. The bookkeeper would also need to monitor and log fixed assets and work out the cost of goods sold at the year end so that money is allocated to expenses according to the reality of the business and expenditure is spread realistically over the life of the company.
The tasks of the bookkeeper are vital in that he will be the one who logs exactly what’s happening with the cash flow, any trends in the sales or the losses and the exact status of the bank account (crucial as if the business owner is not wholly aware of what is happening there then the company can run into trouble overnight). Any bookkeeper tasked with maintaining up to date cash flow records will need access to the company bank and or credit card accounts in order to carry out bank reconciliations. This involves marking off what incomings and outgoings are logged with the bank or credit card. Typically bank account statements lag behind real time. This is where the good bookkeeper comes into her own; she will know exactly what cash is available and when.
One very important task of the bookkeeper is to keep a track of unpaid bills and invoices. For instance without the bookkeeper keeping a true account of the monies flowing into and out of the business it’s all too easy to spend cash that’s not there. If someone has been late paying their invoice the bookkeeper may be tasked with contacting the person to find out how the money will be paid. In future the bookkeeper may be asked to work out with the customer a payment plan to avoid late payments being made in the future.
Bookkeepers also work on paying the bills. These should be paid on time and double checked that you are not over or underpaying the amount. In this way the bookkeeper safeguards the good name and the good will of the company which can make the difference between surviving or sinking in difficult trading times.
At all times the bookkeeper is tasked with being accurate and honest. He or she will need to check the figures and report precisely what is going on in the company. They would need to let management know about any irregularities. Without a clear and comprehensible picture of the business trade and how it is progressing it will not be obvious if the company is making a profit. Without a profit the business will not be viable. The bookkeeper in many ways is the heart of the business and should be respected and supported for the work that they do.
The bookkeeper also needs to be able to hand over good, clear records of the life of the business to the accountant as and when so that they can work on the financial statements for the business. It may be that external auditors double check the ongoings within the company. The bookkeeper may also be tasked with creating the paperwork for them.
In conclusion the tasks of the bookkeeper will vary depending on the nature of the business and the level of expertise of the bookkeeper. In all cases the bookkeeper will need to have the same qualities of attention to detail, ability to deal with complexity and to be thorough and discrete with sensitive data.
The work of the bookkeeper has been done for centuries and in the most basic of terms you will be keeping track of what’s happening to the money that a business trades in. Bookkeeping duties consist of keeping the accounts for a business. A business depends on the health of the financial reporting that the bookkeeper does. The official title of the person who does the bookkeeping work is the ‘bookkeeper’. The bookkeeper will provide an essential service to a business as she will process and record what is actually going on e.g. everyday transactions, as well as organising the information needed to produce financial statements.
Bookkeepers make sure that invoices, receipts, all the paper documentation from running a business is carefully ‘posted’ or written in to relevant books or logged into computer software created specifically to track and record the financial activities of the company.
A bookkeeper must also keep track of the bank account or accounts and relate the incomings and outgoings of the business to those accounts, noting that each transaction is matched to that of the daily life of the company. In other words one of the most important functions of the bookkeeper is to reconcile the bank account and other accounts against what is happening with the monetary dealings of the business.
The bookkeeper may have a wide variety of duties such as organising the paying of suppliers and logging purchase orders raised by the company. The invoices generated will need to be sent out as soon as possible and their payment needs to be clearly noted and tracked. Outstanding payments may need to be followed up. In some companies this will be done by the bookkeeper.
If the business is VAT registered or collects sales tax from clients then the revenues will need to be appropriately forwarded to the relevant government departments (e.g. HMRC or the IRS etc.). The bookkeeper will be responsible for making sure that the amounts collected make sense when related to the financial activities of the firm.
Depending on the way the company trades the bookkeeper may also need to collect and bank petty cash. If the business serves clients face to face and handles cash transactions then the bookkeeper will need to record and maintain the float. This will ensure there is money in the till in case the sale involves cash (e.g. and not a debit or credit card).
The bookkeeper may need to start from scratch and create an accounting system if it is a new company. She will need to create a chart of accounts and manage the paperwork using files and logging systems that will ensure that all the important papers can be found easily. In the UK firms need to keep six years of information in case of a government inspection. If the company grows they then may also need to use an accountant. The bookkeeper may need to be the spokesperson for the company if the accountant needs information for his or her analyses.
Bookkeepers should have basic common sense and have strong numeracy skills as they will be a vital source of information for the business. He or she will need to be capable of managing an orderly filing system for the accounts and records. Bookkeeping duties will involve using a computer or written system that basically logs every financial transaction the company makes so the bookkeeper may well need technical know-how or at the very least good, clear handwriting and touch-typing skills.
Bookkeepers may have qualifications showing their abilities to keep good and accurate records. They will need to run the business legally and show where the money that the business trades in came from and where it is going to, or credits and debits. The bookkeeper will also need to be discrete and aware of the confidentiality of their role. He will need to pay close attention to the nitty gritty and 100% thorough in all the details and data. If the bookkeeper finds inaccuracies in the records he or she will need to track back to work out what has gone wrong and update the information so that it is right. Bookkeeping requires extreme concentration and a love of restoring order to a chaos of paper and written data. The data needs to be in good order so that if the bookkeeper needs to show the information to the business owner or a third party she will be able to see the financial standing of the company at a glance which should then also help with future financial planning for the business.
Just about every business will need a bookkeeper to manage the records and keep track of the financial aspects of the company. Many people if they start their own company have to become their own bookkeepers and in this way they keep their pulse on the financial position of the company. However as a business grows it results in having to employ others to do this part of the firm’s work. In larger sized businesses there may be several bookkeepers or bookkeepers who specialise in one particular area of the business. A bookkeeper, therefore may also need to be a good communicator and be skilled at working with others to ensure that the financial records are passed over to the relevant section in a timely fashion and with regard to adequate security.
Bookkeepers are employed in the financial industry in payroll, general accounting and in tax preparation services. Bookkeepers also work in retail services as well as in healthcare, insurance and in the wholesale supply of goods to companies. Many people freelance as bookkeepers. The working hours of an employed bookkeeper would usually be during the week (Monday to Friday). If you freelance this may be more suitable for your requirements as you can then choose your hours to fit in with other commitments.
A bookkeeper’s duties are fairly specific and should not be confused with the work an accountant does. The accountant works with the data the bookkeeper provides and uses this to create analyses and reports on the financial aspects of a business to the management. An accountant typically has many years of training and formally recognised qualifications which should appear on the documentation provided by your accountant.
What Are Bookkeeping Skills?
Being a good bookkeeper means being able to represent an exact picture of the financial aspects of your business on paper or electronic files. You need all sorts of skills to become a great bookkeeper; soft and hard skills, and above all an interest in having an overview of the financial functioning of the business.
The hard skills you need to be a brilliant bookkeeper are, among other things, to have an understanding of numbers and an eye for detail. You will need to have a certain level of maths. You will need to learn or hone your natural talents for accurate record keeping.
The soft skills you will need to be a first class bookkeeper are to have a strong commitment to the work and to be able to obtain an overview of the company; to see the bigger picture. As the bookkeeper you will find that you are able to see trends in the flow of finances and part of your role will be to work with your findings to enable the business to grow and prosper. As well as being key to communicating the overall financial health of the business you will need to attend to the nitty gritty, the details. Of course no-one is perfect and you may make mistakes sometimes. Your role will also involve double-checking all your accounts and correcting any errors you or anyone else may have made in doing the record-keeping.
Basic bookkeeping skills are learned and used by accountants, although a bookkeeper is not an accountant. The accountant will use information compiled by the bookkeeper to create the end of year accounts. Being an effective bookkeeper also means you have to be a great communicator. Your work should be clear and logical. The accounts you keep should follow basic bookkeeping principles that are understood throughout the industry.
You will need to learn bookkeeping and accounting language. You will need to learn the definitions for phrases such as debits and credits, accounts payable and receivable, accruals and auditing as well as the Balance Sheet. You will learn to closely track the activity in the bank and link it to what is happening in the business: e.g. bank deposits and reconciliation. A bookkeeper will also need to have a good grasp of how the value of equipment changes over time (‘depreciation’). You will also have to work your way through financial statements and learn about journal entries and in some cases VAT and the way that this is managed in the accounts.
You may need to train and obtain some qualifications. There are numerous courses available; some people train in-house as they work. Others prefer to apply for their first bookkeeping role having completed a course. You may be thinking of starting your own business and as a result need to become your own bookkeeper.
These days it is essential to be computer literate and to have a grasp of current technology as so many companies now use computer programmes to keep their accounts. So this is where your hard skills learning to touch type and using computing software will be useful. Your soft skills will also be relevant as you will need to have a good overall understanding of the company in order to oversee the maintenance of the figures and to present them in a coherent and comprehensible way to third parties.
A bookkeeper needs above all great data entry skills. Accurate recording of figures and the relaying of the numbers onto the ledgers or into the computer programme is key to the job of bookkeeper.
The information should be stored safely and securely. If the data is kept on physical copies these should be stored in lockable cupboards and another hard copy should be kept off-site. Therefore keeping brilliantly well-organised records is one of the key factors in being a great bookkeeper.
If you use technology to keep your company books then you need to secure your electronic data just as well if not more so than paper copies. An encrypting programme/software should be employed to reduce or minimise the chances of your company information falling into the wrong hands.
So a bookkeeper needs to be orderly, methodical and strictly accurate.
The theory of bookkeeping is to have a paper/data trail to show where the money you are making came from and also where it is going to. So you must be disciplined in your approach. No transaction should be omitted; every entry should be clear and concise reflecting the reality of the business.
All receipts should be stored neatly and in a numbered sequence which is then logged for future reference. This will help ensure that any query will be easily resolved. In effect every transaction should be clearly logged. Your skills as a bookkeeper are to be able to show a third party what was spent where and how the funds were used and accrued. Again every incoming financial transaction should have an invoice logged against it. These also are numbered in a logical and sequential way.
A bookkeeper needs to be able to have a handle on the whole financial picture of the company and as the bookkeeper your efficient work and clear logging of records will save the company time and money, so increasing its overall profit margin.
In conclusion, bookkeeping skills are many and varied however there is one basic requirement that I have not yet mentioned which is essential above and beyond all others: you need to be open and honest. That way you will create fantastic records and also give the business the tools it needs to grow and prosper. In some ways the bookkeeper is the key to a successful company. Without a clear picture of the finances any company is bound to flounder. Your dedication to keeping accurate and clear records is essential to the ongoing life of the company. Your bookkeeping skills will become core to the welfare of the business and as a result you will be irreplaceable and respected.
So you’ve just become the treasurer (or are thinking of becoming a treasurer) for your local club, but you’re not sure what it involves, or your responsibilities for taking over this role.
Well, let’s clear it all up so you know what to expect and what you need to do.
First off, you need to know the treasurers chief role is to keep the books up to date, and to report to the club’s committee about the club’s finances whenever required according to the club’s constitution (or articles of association if it’s been formed as a limited company and the articles include those details).
Second, you need to know there is a clear distinction between what a bookkeeper is responsible for and what accountants do. That is, the bookkeeper’s role is to ensure the club’s transactions are recorded, and the accountant’s role is to audit those transactions, create periodic reports, and submit tax returns (yes, clubs have to pay tax too unless they’re registered charities, and even then not everything is free of tax).
If your club can afford it, always employ a professional bookkeeper and accountant.
TOP TIP: You can often get an accountant for free if your club serves the community (and the accounts are simple) because accountants tend to value the kudos they get for doing good community work out of the goodness of their hearts (just promise them you’ll tell everyone you know how brilliant they are for helping you out).
Having said all that, it’s odds on you will be doing most of the bookkeeping and reporting yourself (and for many, even completing tax returns and submitting them are part of the job – you might want to check that with the chairperson first if you have any doubts about your role as treasurer).
But don’t panic. it’s not hard.
Using software is a very good idea, but most clubs are still run using spreadsheets to record transactions. And on the subject of software, why not try and leverage your community minded spirit to try to get the software free or at a discount using the leverage that you’ll be happy to promote the accounting software company on your club website.
It may not include all of the above, but it may also include more. Your chairperson will usually know. Always ask so you don’t discover any surprises later on. If in any doubt, ensure (or insist) the club appoint an accountant (it doesn’t have to cost any money if you follow the advice above).
The first rule. Know your debits from your credits. Every bookkeeping system on the planet uses the double-entry bookkeeping process (whatever claims you may have read). This is because every transaction ALWAYS affects AT LEAST TWO accounts.
Every transaction consists of at least two entries in your books. Double-entry is called double-entry because of these minimum two entries that make up a complete transaction. It has NOTHING to do with repeating the same information twice (which is a common urban myth).
If you haven’t already subscribed to the Accounting for Everyone Bookkeeping Course, you will learn everything you need to know about this tricky subject (written in simple terms, and it also includes personal help if you get stuck).
If you’re using spreadsheets to record your club’s day to day financial activities, the simplest way is to use a single spreadsheet, but broken down unto multiple tabs. That way, everything will be contained in one place, and will be far easier to manage.
You will also be able to cross reference items and produce reports more easily.
Each of the entries made from a transaction will need the following information as a minimum:
Here’s the minimum list of tabs you’ll need in your spreadsheet:
It’s a very good idea to open a bank account for the club. Make sure there are at least 2 signees (usually the treasurer and chairperson), otherwise responsibility and trust will be questioned – plus it’s best practice and will serve to protect you from insinuations and allegations.
Try to find a bank that does not charge you fees. Many have concessions in this area if you can prove you are a service to the community and not a profit making entity.
Keep all bank statements so you can show any requests about activity easily (this is one area where paper still rules the world despite our best efforts to save it – if you care about the environment, try and persuade committee members that everything can be accessed electronically these days (use Google docs to share spreadsheets, reports and even images – it costs nothing, and you just need to setup a free Google Gmail account to use it).
If you are taking over the role from someone else, it goes without saying they will be a great source of knowledge, but if not, you can always access advice if you join the Accounting for Everyone Online Bookkeeping Course (it also includes a 3 part treasurers guide).
Treasurers are usually unpaid volunteers (if you are one of these, welcome to the club!). Your job can range from the ridiculously easy to the incredibly complex. However, if you have just volunteered to be a treasurer for your local club/society/charity, help is at hand.
First off, it can be a pleasure (really!) provided you can get along with your colleagues. Suppose your distant cousin happens to be secretary of your society and informs you via an email that a cheque was used to purchase some equipment. Here are the steps you will need to make in order to write up the transaction in your account book:
1. Reply to your cousin asking how much the cheque was for.
2. Write again asking who the cheque was paid to (so you can find out yourself how much it was for).
3. Write again asking for the cheque book to be forwarded to you.
4. Telephone your bank to cancel the cheque book and explain that the secretary has lost it.
5. Wait for the bank statement to arrive so you can find out how much the cheque was for.
6. Write to your bank and ask them for a photocopy of the cheque.
7. Write a letter to the recipient of the cheque asking if they could supply a duplicate receipt (because the original was lost along with the cheque book).
8. Hand in your resignation!
Alternatively, you can go along to your first committee meeting and lay down some ground rules:
1. All (large) purchases must be agreed by the committee (the committee to agree on what constitutes ‘large’).
2. It is the purchaser’s responsibility to get a receipt – no matter how small the amount (no receipt – no payment).
3. Cheques must be signed by (at least) two committee members.
Getting agreement to the above will make your job a lot less stressful.
Although the whole committee is collectively responsible for the finances, it is the treasurers job to ensure that everything of a financial nature is accounted for.
This section outlines the things you should do to ensure your job as a treasurer is made as easy and trouble free as possible.
It is important that you set aside a certain amount of time on a regular basis to keep the accounts up to date rather than throw everything in a shoe box and do it every quarter. The reasons are simple:
The amount of time you will need to spend depends on a lot of factors, but the two most obvious ones are:
If you use a good accounting program it will certainly speed things up. Even if you only have a few transactions a week it will still save time – your end of year reports will be ready at the click of a button.
An understanding of double-entry accounting is a useful asset to have, since every piece of accounting software in use today uses it behind the scenes. If you do possess the ‘knowledge’, it will help if you need to present the accounts to an accountant.
Book-keeping is no different whether it is for a business or as a treasurer: your job is to record the flow of money into and out of the organisation. The labels you use to summarise these flows may be different, but the concept is the same.
Bookkeeping is the process of recording daily transactions of a business and is a key component to building a financially successful business. Bookkeeping is normally completed by bookkeepers. Some tasks regularly undertaken by a bookkeeper can be:
Accounting software such as Sage, Xero, QuickBooks, Accountz etc. are used for recording financial transactions. Complexity of a bookkeeping system depends on the size of a business and the number of transactions that are completed daily, weekly, and monthly. All sales and purchases made by a business need to be recorded in the ledger.
Accounting is the process of analysing and interpreting of financial information compiled by a bookkeeper or business owner, and produces financial reports and statements which represent the financial performance of a business. These reports help business owners and directors to make informed business decisions.
The process of accounting is more subjective than bookkeeping, which is largely transactional. An accountant will be in a position, through analysis of past performance, to offer financial projections and advice on future financial elements of your business.
Using the information entered by the bookkeeper into the ledgers, accounting reveals the bigger picture of the business, and the path the company is progressing on. Business owners will often look to accountants for help with strategic tax planning, financial forecasting, and tax filing.
You need basic accounting knowledge to be able to practice bookkeeping or accounting. In smaller companies, bookkeepers get more involved with the accounting process as well as recording financial transactions. They can generate financial reports using template reports from accounting software. Sometimes, an accountant records the financial transactions for a company, handling the bookkeeping portion of the accounting process.
To work as a bookkeeper you will need to study a few accounting courses and develop a basic understanding of accounting. To work in accounting, you must study for a higher level of expertise. Accountants are qualified to handle the entire accounting process, while bookkeepers are qualified to handle recording financial transactions. Bookkeepers record and classify financial data, the accountants analyse the financial data.
Bookkeepers are less expensive than accountants which make them a great choice for a company that needs day-to-day expertise. Pricing depends on geographic location and industry, as well as experience.
Many bookkeepers work as freelancers for small businesses in need of financial record keeping.
Many bookkeepers start as data-entry clerk for a business and grow, through experience and merit, into being a go-to person for the day-to-day financial recording. As they develop their skills through experience and studying, some bookkeepers move on to become accountants.
Both bookkeepers and accountants can study with a professional organisation such as IAB (International Association of Bookkeepers), ICB (Institute of Certified Bookkeepers) or AAT (Association of Accounting Technicians).
As a business owner how will you know if you need a bookkeeper or an accountant to help with the financial side of your business? The size of your business, the industry your company is in, how many employees do they have, are a few factors that can determine if you need a bookkeeper or an accountant.
The more complex the organisation, the more important it is to make sure that the company’s bookkeeper is also supported by an accountant who can provide advice as and if needed. It’s a great partnership that keeps communication open and data strong.
Is advisable to ask for client references and proof of insurance, which is available to both bookkeepers and accountants. To make you hire a qualified bookkeeper or accountant ask for references and call them. Also if certified, call the association or organisation through which the professional is certified.
At which stage in your business should you hire a bookkeeper or accountant? Advisable as soon as you start your business. However, many business owners however will try to sort out the information themselves and then have a bumpy ride when it comes time to transition.
If hiring a bookkeeper when starting up is not an option, consult with a bookkeeper or accountant when the business is started and then perhaps touch base periodically, such as once a month or quarter.
Ask for a quote or hourly fees, and fit in some sort of periodic meeting into your budget. Errors tend to continue until caught at year end or the next time a professional sees the books. Books set up accurate at the start of a business can be a strong tool for measurement and growth.
The simple answer to the question ‘Are bookkeeping businesses profitable?’ is ‘Yes.’ The most important thing when setting up your new bookkeeping business is to be clear about the process; be accurate and knowledgeable about the numbers you are handling and work on the detail. That will ensure that you know exactly what is going on in the business not only your own but your clients’ businesses. Make sure you charge enough for your services to afford yourself the lifestyle you want and include fees to help you achieve the profit margin you need to thrive now as well as save for a rainy day!
You need o keep written or computerised documents on the business (especially your own) which means noting all the incomings, outgoings and the cash flow of the company. This information will lead you to the all-important profit margin. Organise your business so that it runs smoothly and you have clear steps in place. This should in turn help you to step back from the business and get an overview on how it is progressing. By doing this you should be able to see how it can grow.
It’s important to train to become a bookkeeper. At the present time you do not need any formal qualifications to become a bookkeeper but training is necessary to help you understand the jargon at the very least. You might even begin by working with another bookkeeper in a small business or sometimes you can get free training with local government or you can look into courses within an educational establishment. Nowadays you can also learn much of your trade through watching online courses.
If the business that you are keeping the accounts for is simple with few transactions you may find that you can manage with a written ledger e.g. written records of all the incomings and outgoings. However a computerised system is usually used these days and there are free trials of all the major brands of software available to help you to work out which one might suit you and your needs as a bookkeeper. Spreadsheets are commonly used in bookkeeping as well. However you run your business you will need to organise not just the accounts but your time. You need to make the most return out of your investment (ROI). Profitability depends on this. The most efficient system is the most cost-effective.
Working from home also increases your profitability. You will not need expensive premises to conduct your bookkeeping trade in the early days. Some expenses are also tax-deductible which helps with the profit margin. You may be able to deduct expenses for part of your home if you are using it to do your business in.
Bookkeeping businesses will always be in demand since everyone needs to keep accounts of their commercial transactions and inform HMRC/the IRS about their profits or losses. Many small business owners find that they would prefer to spend their time working on their businesses rather than working out the maths/details and so they end up outsourcing the bookkeeping which is why bookkeeping can be so profitable for you. However you will also need to be scrupulously honest and ensure the accuracy of your work. This demands concentration and you will need to work hard at being the best bookkeeper around but if you enjoy the tasks that bookkeeping presents to you then you really can’t go wrong.
How can you let people know that you are available to help them with the bookkeeping? Marketing. This aspect is an overlooked and key aspect to being a business owner in any trade who wants to make a profit. Marketing your company is essential. Use leafleting, posters and email to contact potential customers. Walk door to door to get yourself started if you want to! It’s free and might just help you to find your first client. After all how can you even get started on your business if no-one knows that you exist? Write a simple plan and follow it through. This plan might be as basic as ‘contact one new person per day’. But create a ‘map’ of how you will let people know that you are out there. Then follow it.
Always be looking for allies. You will be hopefully so successful that you will have too much work. Along your bookkeeping journey keep in mind that you hopefully will soon need to get help with the business in order to grow it to increase your profitability. It might be that you have help where you live (partner, husband or wife) or you have friends that could be called on. Your aim in the long run will be to have a business that almost runs itself. You will be so organised that you almost don’t need to be there. If you can get this right this will free you up to even have a holiday and also to keep your sights on the bigger picture and run the business rather than become the business itself.
In a nutshell if you enjoy organising paperwork, are prepared to keep good, clear records of all the business’s transactions and you love numbers then becoming a bookkeeper could be not only profitable but enjoyable. Organise your plan to let other know that you are available to do their bookkeeping. Work from home to help save money on premises costs. Keep your eye on potential work colleagues for when you grow you need that team behind you. Work at it slowly at first taking on one client at a time and do the necessary training and soon you will find you have more and more clients and the pennies should roll in very nicely!
The simplest way to become a bookkeeper is to pass a basic bookkeeping certification, such as the Accounting for Everything online course available on this site, or to step up to the highest level through the International Association of Bookkeepers (IAB).
Whatever you choose to do, get some basic bookkeeping tuition first before you start the bookkeeper’s journey.
Another way to do that is to buy a self-study book. Once again, the IAB is excellent for this. They offer text books to buy online for all three levels you will need to become a registered bookkeeper.
The alternative to all the above is to apply as an accounts junior or apprentice in a firm who are willing to help you train. And if you do choose to go down that path, then having a basic knowledge of the following topics will help you pass the interview with ease:
You don’t need to know all these accounting terms and processes inside out (that can take years of training), but an overall knowledge of what they mean will certainly help.
You can use the Accounting Glossary here on the Accounting for Everyone website to get up to speed with that (click any of the terms above to discover what they mean – you will need to scroll around though as the links only take you to the sections in which the accounting terms appear – a new tab will open for each term so you don’t lose your place here).
Another great resource is our FREE Definitive Guide To Bookkeeping, also on this site. This will give you a deeper look into most aspects of becoming a bookkeeping, especially if you are thinking of opening your own bookkeeping business.
After you have taken your basic training, the next thing is to decide if you want to become a bookkeeper as a career, or if you want to become a self-employed bookkeeper in business.
Taking up bookkeeping as a career will always be a smart move as this is the one thing ALL businesses require.
Smaller businesses usually attempt to do it themselves, and almost always come unstuck because the legislation (no matter which country you are in) is rarely simple. As a result, very few business owners know how to keep their accounting books properly.
Which means, if your decision is to start a bookkeeping practice, then you’re also in a large market due to the sheer number of businesses already established, but also an ever increasing number of new businesses that are appearing in every industry and walk of life.
If you’ve been reading along this far, you will know the steps:
a) Get a solid understanding of double-entry bookkeeping skills
b) Make a decision on bookkeeping as a career or as a business
Next up, you need to consider your country’s legislation regarding how you can legally operate as a bookkeeper.
If your choice was bookkeeping as a career, this should be taken care of by the firm who employs you, since they must also operate legally and ultimately, it’s the owners of the firm who are responsible for their books and accounting statements.
But if your choice was to set up in business, then things do get more complicated. There are far too many countries around the world for me to keep track of for the purposes of this guide on how to become a bookkeeper, but generally there are two types:
In the UK, it is the latter. You do not need to prove anything at all about your knowledge of bookkeeping. BUT, you will need to register with the UK’s tax office, called HMRC if you want to practice as a commercial bookkeeper. And there is a cost to that.
This is why I also recommend joining a professional bookkeeping organisation such as the IAB, who will cover you. Note also, that in most countries you will also need insurance to operate.
This can be on many different levels including:
Following this, the key to becoming a proficient bookkeeper is simply practice. As much of it as you can get.
Which is why becoming an accounts clerk is always the best way to start. You will usually get free training as well as a paid job, and you will get to work on a large number of different client accounts.
On top of that, your CV will start to shine over the years, thus giving you greater chances of promotion, as well as the opportunity to go into business yourself.
I wish you very good luck in your new career and hope it serves you well.
Quentin Pain FIAB FIoEE
Knowing the difference between gross profit and net profit matters for 2 main reasons:
And that’s because it records the difference between your sales and what is costs you directly to make those sales. That difference represents your sales margin or markup. It is the first indicator of profitability in a business.
A while back I was watching an episode of Dragons Den (called Shark Tank in the USA) that reminded me of the confusion that abounds around the words: turnover, gross profit, net profit, profit margin, EBITDA and a bunch of other terms that have everything to do with how you view the profitability of a business.
Contestants on that show almost always fail when they get their numbers wrong (or worse – they don’t know what they mean). But luckily it’s easy. Read on…
This is your total sales figure. Literally, in money terms, how much you sold during a particular period (usually your financial year). Add up every bit of money that comes into the business with the exception of Sales Tax/VAT, loans, sale of capital items, and interest received and that is your turnover.
The reason loans, capital items and other money is not included is because they are usually not a core part of a business. So whatever it is a business sells as a normal part of its trading activities represents its turnover.
Turnover To Date means the turnover so far this financial year. From this you can start to make a prediction of your total turnover for the year. For example, if you’re 9 months into your year and your turnover to date is 75,000, then you can predict with some degree of certainty that your total turnover for the year will be 100,000.
If you have professional indemnity insurance you will need to have an idea of your forecast turnover for the current year. Most policies allow a degree of error of 50% (to make up for the uncertainty factor), but check your insurance small print.
Never confuse turnover with profit. Always quote turnover excluding VAT (or Sales Tax in the USA). If you quote turnover including tax, any potential investors will run a mile (they will see you as someone who likes to inflate figures). Sales Tax and VAT is not your money (you are just collecting it on behalf of the government) so it should never be included.
If all you sell is a service. And there are no costs directly involved in supplying that service, then your gross profit is the same as your turnover.
However, if you resell goods or services, manufacture things for resale or have costs directly involved with selling what you do, then you need to remove those costs from your sales in order to arrive at your gross profit.
Typically these costs will be held in an account called Cost of Goods Sold (aka COGS). If you sell mainly services, this is often shortened to simply Cost of Sales (COS).
Here’s a simple example: You buy a widget at a cost of 100 and you resell it for 200. If you sell just one of these, your turnover will be 200. However, your gross profit will be 100 (because you must subtract the cost of the goods sold).
Other direct costs include shipping or postal costs (as these will not be incurred if nothing is sold). They will also include packaging of those goods, and if you manufacture them yourself, all the costs involved in that process (we know they are direct because unless you manufacture them, you won’t have anything to sell, plus everything you manufacture is for resale).
Compare this to the costs of renting your office and heating and lighting it. You have to pay all those costs whether or not you sell a thing. These costs are termed overhead costs. Salaries and wages are also part of your overhead so are not included in your gross profit calculation. These items are included later to determine your net profit (see below).
Gross margin measures the gap between what it cost you to produce a product (or buy it for resale) and how much you got for it when you sold it.
Using the previous example, the gross margin is 50%. Gross Margin = (Selling Price less Cost Price) divided by Selling Price multiplied by 100.
As another example, if you sold a product for 200 which cost you 160 to buy or manufacture, your gross margin would be 20%. Here’s the filled in gross margin equation of that last example: (200 – 160) / 200 x 100 = 20
Like gross profit, knowing your gross margin is vital. And that means knowing with a good deal of accuracy your cost of goods or cost of sales. If you don’t know what it costs you to buy, manufacture and ship something, then you cannot set a price that you know will return a profit (and this is why so many contestants in Dragon’s Den and Shark Tank get eaten alive!).
Markup is another way of talking about margin. If you buy a product for 100 and you resell it for 200, you have marked it up 100%. If you bought something for 100 and wanted to mark it up by 25%, the selling price would be 125.
Most retailers operate on a markup of at least 100%. The exception is for commodities where the competition is usually so fierce, everyone is forced to compete on price.
Certain luxury goods also have the same problem, but in a different way. For example, Apple sell both online and in retail stores. They fix their own prices and ensure those prices remain high everywhere by selling on goods to other retailers with only a small discount. Note that price fixing in any other way (eg. trying to force your resellers to sell at a certain price) is illegal in most countries.
Be warned. There are multiple versions of Net Profit. The bottom line is your turnover less all costs. Your costs are not only Cogs and overheads but also depreciation of your assets, any amortisation of loans and just as importantly the tax liability on any profit made.
Accountants use different abbreviations to show exactly what degree of profit they are reporting. The most common is EBITDA.
EBITDA is an acronym for Earnings Before Interest, Taxation, Depreciation and Amortisation. In other words your turnover less COGS, overheads and other expenses. EBITDA is the most common way to report Net Profit.
You can quote on any subset of this. For example: EBIT = Earnings Before Interest and Taxation (so here we are including depreciation and amortisation).
Learn the above and you will impress any investor (and bank manager).
NOTE: Find out more about profit, loss and other accounting and bookkeeping jargon with our free Definitive Guide to Bookkeeping belowContinue With The Definitive Guide To Bookkeeping Here
Depreciation is the amount an asset has reduced depending on age, wear and tear, and current market value. It is a core part of bookkeeping, and usually applied at year end (for larger businesses it is often calculated every month as part of management reporting).
When you record the purchase of an asset such as equipment or buildings for use in a business, you place it in the Fixed Asset section of your Chart of Accounts. Whenever you look at this section, you can see at a glance how much your assets originally cost.
However, in order to account correctly for your business, you need to record the change in value of those assets. This can be because the item is no longer new, and is therefore worth less than originally paid. It can also be due to wear and tear or damage.
On top of that, an asset could also be stolen, exchanged for another or simply sold. All of this needs recording.
It can be recorded directly in the asset’s account itself, so a check on the transactions and the balance in that account will show its original value followed by its reduction in value over the years, or, more usually, a separate account will be opened to record those changes. This extra account is called an Accumulated Depreciation account (because the amount the asset reduces by over time is added together to give a total balance).
This continues until the Asset’s account its corresponding depreciation account cancel each other out. Whilst the asset still has a value, we can look at the two accounts together to show the current value of the asset.
Usually, assets are classified into general groups (eg. Office Equipment, Motor Vehicles) to keep the number of accounts as small as necessary to accommodate reporting requirements for both the Inland Revenue and management.
Strictly, any asset should be valued at its actual market price when the depreciation needs to be reported. In reality, that can often be hard to do, so there are a few conventional ways to make this easier. The two most used forms of depreciation are:
Straight line means reducing the asset by a fixed value until the asset balance is zero. For example, at 25% per year, it will take 4 years to reduce the asset to zero. This is the most common way to depreciate assets.
A reducing balance means the asset never gets to zero. Using the same 25% rate, the reduction is applied to the last known value. So if an asset starts at 400, then after 1 year at 25% it will be worth 300. At this point it is the same as the Straight Line method. However, in year 2, it will be 25% of 300 (slightly less than 100 taken in year 1).
The reducing balance method is more accurate since it could be argued that whilst you still have the asset it will always have a value, however small.
Depreciation is a bookkeeping exercise. It has nothing to do with tax liability. Instead inland revenue services around the world offer tax benefits, an example of which is Capital Allowances (UK). You can choose to take the allowance or not depending on whether you have made a profit. That means the allowance will often be completely out of kilter with the book value.
From a business perspective, it is the book value that is important. It tells the business owner how much it would cost to replace those assets should it become necessary to do so.
There are 3 main sections in any set of books for any business. They are:
Assets is where we store the value of all equipment, vehicles or other purchases of substantial value that we intend to use in the business. Assets represent the things the business owns. Some of those things may be items we buy with the intention of selling them for a profit. This is our stock (also known as inventory). However, those are not the assets we use to report depreciation on.
Whilst they too (stock bought fo resale) decrease in value if they’re not sold, they are accounted for in a slight different way, which will be covered in another article.
What we’re interested in right now are those things the business buys that will last longer than 1 year and that are used either in the business, or to add value to the business.
Office Equipment is the most common, since this is one thing every business (that has an office) is likely to buy – even if it’s on hire purchase or lease-buy type contracts.
If the business is the legal owner of that equipment (regardless of whether it has been paid of in full) then it will be recorded on the balance sheet as an asset, and it will also have a separate account created for it that shows by how much its value has decreased since it was purchased.
In other words we will be using 2 accounts in our bookkeeping system to record its total current value. For something like office equipment, these are usually called:
When we purchase office equipment we credit the bank (assuming that’s how we paid for it) and we debit Office Equipment. If we value of our equipment was, say, 1000, then the balance of the Office Equipment account at that point in time would be 1000.
If we decided to depreciate office equipment using the straight line method by 25%, we would add a new transaction crediting Office Equipment Depreciation by 250 (1000 x 25%).
Since every credit must be balanced by a debit, the other side of this double entry would be a debit to Office Equipment Depreciation Expense. This will affect our profitability, which is what we want – the company has in effect lost 250 of its value during that period of time, which is now reflected in the P&L account.
To get the current value of our asset we add the balances of the 2 accounts together: 1000 – 250 = 750. We are saying that the value of that office equipment (were we to try to sell it at the time we depreciated it) would be 750. This is typically done at the end of each financial year.
In year 2, we would add the same depreciation transactions, and so the combined balances of the 2 accounts would drop to 500. In year 3 the balance would be 250. And in year 4 it would be zero.
That fall is also recorded in the profit and loss account as explained, which ultimately ends up in the Equity section of our balance sheet. The equity section represents what the business owes its owners, so if you’re following along, you can see how that happens from the entries we have been making.
In reality that never happens because we will very likely have bought more office equipment in the meantime. Plus any equipment that has depreciated to zero (ie. that has been on the books for 4 or more years) will either have been thrown or given away, or sold.
The last thing we need to do to complete an asset that has no value in the books is to remove its original cost from, in this example, the Office Equipment account, and its total depreciation in the Office Equipment Depreciation account. We do that by crediting Office Equipment for the assets full value and debiting Office Equipment Depreciation by the same amount.
If an asset is sold, and the price we got for it is worth more than the book value (the ‘book value’ is literally the total balance in our books of the asset using those 2 accounts introduced earlier) then we must also report a gain. We have in effect made a profit on the sale of our assets. So that gain will be recorded in our profit and loss account under a new account named something like: “Gain On Sale Of Assets”.
If we sold it at a loss, it would also be recorded in the profit and loss account, but this time in an account named something like: “Loss On Disposal Of Assets”.
The other side of this transaction will debit the account that received the money from the sale (eg. a bank account).
And once that was done, we would then Credit Office Equipment and Debit Office Equipment Depreciation to zero out the value of the original asset and its total depreciation (leaving the rest of the Office Equipment assets and depreciation as they are to reflect the current values).
Suppose we bought an asset for 1000 with cash, depreciated it at the end of the year 1 by 250, and then sold it for 750 for cash. Since the value of the asset at the end of year 1 was 750, and we sold it at that point for 750, no loss or gain has been made. Here’s all the transactions you would have made to account for everything including the original purchase:
If these were the only transactions in our bookkeeping system, we would have the following final balances in our 4 accounts:
Since the -250 cancels the +250 we know the books balance. And that is how it always must be.
In the UK and most countries in the world, you cannot claim capital purchases as a direct expense of the business. This is simply because assets like these usually last more than a year (so you still have the asset and it’s still worth something, so you cannot write its full value off against tax – that’s what it all boils down to – does the thing you bought still have some value and do you still own it at year end).
However, as it depreciates in value over time, you must still record that in your books – as explained above, and it would be wrong that you could not claim that depreciation against tax. But rather than doing the obvious – which is just to respect its value in the profit and loss account, governments over the years have chosen to make it a special case.
And so with a special case you need a special tax, and in the UK its called a Capital Allowance. None of this is recorded in your books. It’s purely a tax thing, not a business value. As a result, if you make a loss one year, you won’t want to claim the depreciation against tax – you can do that next year instead if you make a profit. Because of this discrepancy, your books can show one value for your assets, and the Inland Revenue another.
In the USA different names are used. As it’s also complicated, take a look at the Wikipedia entry for it here.
If you want to know more about depreciation and capital allowances, join the Accounting for Everyone online bookkeeping course today:Find Out More…
In the UK, HMRC have said they will be introducing compulsory quarterly accounting periods for all businesses sometime in the not too distant future (if you’re in any other country and you don’t already have this, be warned, it will be coming to a place near you soon – just as VAT will eventually replace Sales Tax in the USA – it’s just a matter of time).
The new legislation (if implemented) will mean every 3 months you will need to know exactly where you are in your business from a financial perspective.
Anyone who keeps their accounts up to date will have no problem. But those (which is by far the majority now) will find it impossible.
And that’s because they have no idea how to account for their business.
The upside for HMRC is that they will rake in a lot of penalties. The downside for us as business owners is they will have plenty more reasons to go after us.
So how can we learn to take responsibility for our finances as business owners?
And (more importantly!) why would we do that?
What’s the benefit?
I drew up a list of 10 ideas to help:
If you’d rather do this yourself, take a look at the Accounting for Everyone online bookkeeping course. It will help you understand the basics.
I hope I will learn something from this having never been involved in anything like it before but hubby is setting up his own business and wants me to do the admin and book keeping and accounts so have to learn quick. So thank you for this, wish me luck think I’m going to need it.
Thank you so much for providing us such a wonderful platform for distance learning. I am so eager to attend for next session and I am so hungry to know where does the Equity group fit into.Thanks so much for this course, it has been so useful and engaging!!!
I completed the course a couple of months ago, and have just come back to get certified. I passed! Just a note that I’ve had real difficulties with the certificate – had to save the background image as a jpg then copy and paste the text and combine it all in Word. A pdf download would be so much easier!
Anyway, all sorted now, and thanks again. Thank you for this course I need it to brush up on my accounting skills. When you forget the basic you forget the most important part.Hi, I am currently working in a school as Acting Bursar and even though I have a strong finance background I do need to brush up my book keeping skills, I am so glad I came across this course as I feel this will help me immensely and also help boost my confidence in the long run.I’m really glad there is a course structure like this online – – I’m looking forward to learning and getting to work in the next 12 weeks. Will there be a certification given at the end of the 12 weeks?
Hi! I love this as it’s all coming back. Thank you for this free course as it’s a great refresher course. I wonder if you can help me understand and know where I go from here after the free 12 week course. I graduated with BS in Accountancy in the Philippines about 19 years ago. I never work in accounting in this country ever since I came here for family reasons and the thought that my qualification wasn’t recognized here. But at the moment, I’m really interested to work again while I’m helping my friend doing her bookkeeping. Is it really not recognized here? Do I have to study again to work in the accounting field?
Hi! The money will be under asset as cash in the bank, right! Then either way that is equity whatever kind of business but do you mean that if I have a limited company it will be shareholders account but a different account name if different kind of business? Thank you.
Hi! Looking forward to finish the whole 12 week course to hopefully refresh my knowledge in accounting and learn new or different terms e.g. From where I studied accounting, we used Capital instead of Equity. I really wanted to go back in this career but don’t know where to start. I suppose I have to start from the beginning as it was more than 19 years ago and from a different country. So, thank you for this free course.
Hello,I studied ACCA -Association of certified chartered accounting 6 years ago in Ireland and came to Canada after. couldn’t find same rate pay here so I left the career. I didn’t really study keepkeeping or payroll at all but I figure out it is not difficult to do it base on qualification,now I am bookkeeping my husband restaurant from last 2 and half years with excel sheet only without anybody help, except for search from google. I love the way you teach online and I will take few more weeks courses before I decide whether I will go for fast track. am I able to change by the end of course? do you have some payroll course too?
Enjoyed Lesson 1. It is so easy to follow. How do I register for the free week 2 .. Thanks
Ah, thank you for clarifying that… I was really scratching my head trying to work it out!
I’m really enjoying the course and am managing to follow all the explanations and tasks, but a small thing in this week’s lesson has confused me.
You said: ” The date will be the date you compiled this.” Wouldn’t the date for each transaction be the date it took place, rather than the date the accounts were written up? Hope you can clarify this for me, please.
Of course! Thank you for spelling it out for me! I’m enjoying the course so far, but am having trouble discerning Liabilities from Equity in some instances. Why is it that a mortgage is a Liability, but rent comes under PL and is therefore Equity? Surely repayments on a mortgage are part of PL too?
I’m able to understand working the problems and am getting them done without too much struggle. I’m having a terrible time understanding the instructions. When they say take last week’s P&L and add these two entries to it, I look for the P&L, look for the answers to see what it’s supposed to look like and it often doesn’t look like what we had (from what I’m finding, anyhow.) Then the new entries or last week’s data that we’re starting with will be above or below where I expect to see it. I know you can’t tell exactly what I’m talking about when I can’t tell you more precisely and I’m feeling so confused, I can’t explain it. I’m spending far more time trying to figure out the instructions than I am working the problems. The biggest problem seem to be when it refers to work already done. I find the use of the terms “Debtor” and “Creditor” extremely confusing because their use depends on which way the transaction is going.
Are we paying or receiving? I originally learned in my first classes in bookkeeping by using the terms “Accounts Receivable” and “Accounts Payable” and this was far easier to keep straight. If Debtors and Creditors are common industry use, we’ve got to use these terms. I’ve been looking for links or shortcuts to keep them straight but I’ve been wrestling with these terms for several days and still making as many errors in their use as when I started. Got any suggestions?
Many thanks for your reply, I can confirm I have now gone down the fast tract route and am now hooked, this course is great. thank you also for the link I shall have a look at that. I am really enjoying this course,
Can I confirm that I can switch to the fast tracked course if I wish. Also this is a new area for me and I was thinking , do you do other courses that continue on from this one to enable us to become fully qualified bookkeepers etc.Thanks for your encouragement and your answer.
Not following. I’ve been over the entries several times from where we balanced, let’s say the Sales Account. Balance was 2500. Then you added two additional entries, one for 100 and one for 40. But the original sales account had not had any additional entries made to it. But now it has a balance of 150. What changed the balance or is this a different account? Expense accounts had the same thing. I’m missing something.
Thank you for wanting to teach me about bookkeeping/accounting. I really do have a genuine love for accounting, and trying to seek a career in accounting. Right now I’m a college student majoring Business Administration starting out on my associates degree. As you can see, I’m moving in the right direction at this point. I do hope to get something out of your course.
Thanks for getting back to me so soon. I started this course on Monday and have already finished task for week 6. I find it really easy to understand but I’m now struggling to remember everything I have learnt so have to keep going through my notes. I got the last task correct but I think I need To go through this chapter once more to get my head round P&L and to practice a little more. Thanks again for your support and I am sure I will be asking some more questions in the next few days.
Could you please explain me the reasons behind transaction 5 on the task for last week? I did it the other way around: stationery a credit and accounts payable a debit. I understood it as coming from the stationery to accounts payable/creditors (credit – debit).
I got the final answer correct (4400 on both columns) but there was obviously a mistake. Is there a way I could pick this error when doing it for my business?First of all, thanks for introducing this System. I did Accounting far back in 1975 in which I took RSA (Royal Society of Arts) Stages 1 & 2 Bookkeeping and Accounting, but unfortunately never work with it. I’m at the moment a Truck Driver which involve a lot of physical. And due my age I wonder how long I’m going to hang in there, and therefore, need something to backup in case I’ve a change of profession. Once again I say thanks.
I looked for the answer and didn’t see it. May have missed. What is the difference between the b/d (brought down) and c/d (carried down)? I’m having a very hard time finding things: probably spend an hour looking for stuff for every 5 minutes I spend studying. Right now I’m looking for the workbook. I’ve already been in it several times but can’t find it now. Is there a map or some way to find things?I’m spending an hour looking for things for every 5 minutes I spend studying. Right now I’m looking for the workbook. I’ve been in it several times in the past, but now I’ve lost it again.
Is there a map or some structure to how these are arranged? OK, got it,
Thanks. I had not gotten to the workbook.I’m having a hard time getting the picture on this assignment. What is the data we are to work with? You say it’s at the beginning of this lesson and there are 5 answers.
Where are they? Where is the ledger we post to? We draw up a table. What does a table look like? This doesn’t look like what I’ve seen before? Please comment. Thanks.I do not reside in the UK, and my tax authority is US. I like your class it is very straight forward and precise. I am presently thinking about full time bookkeeping and wondered if the class is recognized by US jurisdictions?I just wanted to say how great this course was and how easy it was to learn with your explanations. However i have just paid for the test but it wont appear on my account for me to take it?
I’ve just started this course I’m a stay at home mum with 3 boys 3 and under and want to get a career under my belt before the youngest (23weeks) is in school (so I have a while yet) this is going to sound like a dumb question but I want to make sure I have the correct understand for task 1, I have the understanding that everything that either costs or pays is an account ie: groceries, nursery fees, rent, electric, work(wages) am I on the right line of understanding?
I seem to progress along through a task fine until it includes figures from the previous weeks then it all goes a bit pear shaped. I think the main problem is the continuation of the totals added to the P&L account, back to the drawing board!
I have been working as a bookkeeper for the last 6 years; I am taking your course now because I just want to make sure I’m not missing something, somewhere. I suppose I’m doing it more as an edification that I DO actually know what I’m doing and because I’m tired of losing jobs because I’m not a CPA (yet.)
In short, I’m doing this because #1) I want to go step by step, #2) I want to use it as a ‘refresher’ course, and #3) I want to learn! Thank you for offering this course. What happens if I want to go from free to option #3? Can I change horses in the middle of the stream easily? Please let me know.
Having looked at other books in an attempt to self teach myself this field, I’ve noticed that most textbooks tend to be intimidating by throwing all sorts of technical jargon at you (like “contra-accounts). without explaining their meaning or the reasoning behind it. Here in some very simple lessons you’ve managed to explain what 100?s of pages of reading only seemed to make even more confusing. I’m very glad that I’ve stumbled across your course and even if some of the rules might be slightly different here in the US, at the very least, you’ve given me a much clearer understanding of the principles and philosophies involved. Thank You.
Is there an easy way to remember which way the transaction goes when its ‘a sale on credit of 1500?? It’s these ones I keep getting the wrong way round Just what I needed all this years. Very Interesting. I am enjoying starting to learn about this but im not sure about how to do the task.. I dont suppose there is someone who can point me in the right direction? Do we just need the names of the accounts, or the actual lists. for example: for ‘Bank’ would the account be the bank statements? or everything that appears on the statements? Can you tell i have NEVER done this before haha
I have done some sort of bookkeeping for years at the various jobs I have held, and have used a few different software programs. It has been a long, long time since I took a basic accounting class in school, and I really want to have a working knowledge of what current bookkeeping software is doing, so that I can really be able to confirm the reports. All the calculations are no longer with paper and pencil, yet I do not like to just assume that the program is correct. Although, this is not a software class, per se, I will learn things that I have either forgotten or never really knew. And I will be able to understand what the reports are saying, and correct any errors. Thanks so much for this information.
I’ve just started working from home and I’m struggling to get my head around the bookkeeping I need to do. I’ve a young son so not a lot of time each week to spend learning a new skill on top of trying to keep the business going. I thought I had it worked out but then realised half the information I’d need for a tax return was missing from my files. I’m really hoping this course helps.
Thank you for this free information. I have actually done bookkeeping in an accountants office a few years ago, but I moved. I am now at a point in my life where I need to supplement my single income and have decided to do Freelance Bookkeeping in the evenings and on weekends. I am over half way through the Accounting/Bookkeeping Course with ICS Learning (on line/at home). I just need a little more confidence to get started. I am currently an Administrative Assistant (doing mainly accounts receivables and posting accounts payables. I think this is the just boost to give me more confidence as I know once I get that first job I will feel great. I know I can do the work. Right now I am only comfortable doing the A/R, A/P, Bank Recs and GST here in Alberta. I am able to print out and read the reports from Simply/Sage Accounting also. Thank you again. I know I will benefit. Trish
Is it only me that is still confused? Thank very much. your course is easy to understand and I am very glad that i have started.
No problem, i don’t think it was because I was clever, just that it confused me, and up to then, your course had been very understandable!
As the accounts mentioned were ‘Sales’ and Cash’ (which i used in my answer), your answer used ‘Sales’ and ‘Bank’.
I expect I haven’t fully got it, but as all the other answers, 2-5 (which i got right 🙂 used the same accounts as the question, I thought Task 1 should? Thank you for your quick replay.
I’m studying for an exam at the end of a bookkeeping module as part of an accountancy training (so this is only the beginning for me). Your course is very good, and I thank you very muck for it! I wanted some more information about the imprest system because I need to write about it (and my book doesn’t explain it very well) I was surprised I couldn’t find any mention of it. Another thing that I thought would be part of this is bank reconciliation … would be nice to have, even a short reference would do… or did I miss it? many thanks again!
This is a simple infographic from the International Association of Bookkeepers (IAB) explaining the benefits of becoming a bookkeeper.
Being a bookkeeper could be to learn the trade and gain employment in the industry, or to more fully and perhaps do the books for your business if you own one, or to set up your own bookkeeping business.
Whatever the reason you want to become a bookkeeper, the “Top Reasons to be a Bookkeeper” infographic below will give you plenty of ideas and insights into the profession, especially if you are new to the bookkeeping and accounting industry.
The IAB helps people gain professional qualifications in all aspects of bookkeeping including payroll and has branches in 60 countries around the world as well as distance learning opportunities and home study bookkeeping courses.