Small business owners often grapple with the terms “bookkeeping” and “accounting”. They are not exactly the same thing but both are centred on the accurate recording of financial transactions.
What is the main function of bookkeeping? As we’ve said, it is to record financial transactions. These transactions form the basis of the accounting function, which delves deeper into the recorded information, to interpret and analyse it to help the business owner make important decisions and identify trends.
If you are a small business owner and have landed on this article because you are concerned about your bookkeeping, it’s a great start. Recognising you are not putting as much focus into the bookkeeping side of things as you should be is an important first step.
Why is this? Perhaps your knowledge of bookkeeping is limited and you know you need help but don’t know where to find it. Perhaps you are afraid to really explore what is going on behind the scenes for fear of realising you have made some unfavourable financial decisions.
You are not alone. Thousands of small business owners struggle with accurate financial record keeping.
What’s important to realise though is that accurate bookkeeping and financials are essential to the success of your business. It is never too late to get the right help to get you back on track.
There are many small businesses which start off with a bang and … end with a bang, mainly due to reckless spending and inaccurate bookkeeping.
Some mistakes can be fixed relatively quickly but others, especially those which concern money, can be the death knell for your business.
Here are some of the things which can cause a small business to fail:
- Not having separate personal and business accounts.
- No clear budget set for the business.
- Incurring credit card debt.
- Making big business purchases before you’ve even opened your doors.
- Making big personal purchases (like a new car).
- Not planning for tax season.
- Not saving for a rainy day.
As much as you may love to live in the moment in your personal life, the decisions you make can easily become intertwined with your business life.
Ensuring your personal and business income and expenditure are managed separately gives you better insight into exactly where problems may be creeping in and allows you time to react and rectify these.
Whether you choose to bury your head in the sand or not, bookkeeping is the only way to manage the financial health of your business.
At EasyBiz Technologies, we understand not everyone is a fundi at financials. You don’t have to be today. Accounting software packages make it easy for small business owners to keep on top of their finances and plan for the tax season.
There is no need to go do a bookkeeping course just because you’ve started a business.
Let the right accounting software do the thinking while you get on with what you do best – growing your business.
For more information about EasyBiz Technologies, visit our new site, easybiztech.co.za