Should you be doing the bookkeeping for your business

Do you have the experience and training to do bookkeeping?

The ultimate answer to the question of whether you should be doing the bookkeeping for your business comes down to experience and training. In a nutshell the answer is a definite “no” if you have no prior bookkeeping experience or training unless you have someone who is going to mentor you and make sure you get the correct training as well as check the quality of your work. 

If you have done bookkeeping before and are competent then you should be looking into whether doing the bookkeeping for your business is the most productive use of your time. This is covered in more detail further down in the post.

Where can I get training in bookkeeping?

Before you read further, I must stress that this is “training in bookkeeping” not training on how to use any of the accounting software packages. Training in bookkeeping principles is an absolute must before you attempt to learn to use any accounting software package.

Marketing by accounting software companies in the early 2000’s, when GST was first introduced to Australia, was so close to saying “Buy our product and you can be a bookkeeper” that business owners started doing their own bookkeeping in unprecedented numbers. Little wonder this happened when the largest software supplier at the time was MYOB, an acronym that stood for Mind Your Own Business. Buying software and knowing how to be a bookkeeper are two completely different things.

To get proper training on bookkeeping principles I would recommend the Certificate IV in Accounting and Bookkeeping offered at Monarch Institute. The course can take up to 2 years, which may seem a long time to some, but the online training is top knotch and well worth it.

In this course, once they have taught you the basics of bookkeeping, you then have the option to train on either Xero or MYOB.  Cost for the course at time of writing is $2,350 AUD and government funding may be available.

Cheaper options for learning bookkeeping principles

Learning from books is a much cheaper way to learn and to get you started to see if you like doing bookkeeping. It can be a very good alternative to doing a course, particularly if your goal is not to become a registered BAS agent.

Books that I would recommend you take a look at:

• Australian Master Bookkeepers Guide (link https://shop.wolterskluwer.com.au/items/10076308-0002S) by Stephen Marsden
• Accounting Principles by Anne Collins and Andrew Duncan

Who should I get to be my bookkeeping mentor?

There are many people you can get to help you with your training. The main requirement is that they are experienced and have the time to provide you with training. They also need to have time to check your work.

If you don’t know anybody with these qualifications, then we would recommend sourcing a bookkeeper to provide you with training and check your work. I recommend a bookkeeper over your business tax accountant as bookkeepers charge rates for providing this service are more likely to be a lot less and the teaching more relevant.

Why would doing the bookkeeping for my business not be the most productive use of my time?

Somewhere along the line many business owners lose sight of why they started their business. Whether it be to cut costs or for some other reason, and start trying to do their own bookkeeping. It seems like a good idea at first, but very rarely works out over an extended period of time.

Two main outcomes usually eventuate when business owners try to their own bookkeeping.

• their income drops because instead of spending time chargeable work, they have limited hours in the day, and are spending this valuable time doing something they cannot invoice a client for. To compensate for the loss of income they work more hours and eventually burn out or
• their businesses do not grow. As the much-used statement says “You should be working on your business not in your business”.  By doing their own bookkeeping they are working in their business. Time could be better used doing “on the business” activities such as marketing or procedures. Activities that will aid the business to grow.

What accounting software is easiest to learn on?

Once you have done your training in bookkeeping, before you jump in the deep end and start processing transactions on your businesses live data, you should then learn how to use software in a test environment. Test environments are good as you can make all sorts of errors and not have to worry about spending long amounts of time correcting. The data usually resets once you log out. Both Xero and MYOB offer test companies that you can use during trial periods of their software.

If you have enrolled in a course to get bookkeeping training and you were taught to use accounting software in the course you probably can skip to using live data. If you went down the route of purchasing a book to learn bookkeeping, then purchasing a book is a very good option in learning to use an accounting package as well.

Learning to use Xero accounting software

 Xero is by far the most preferred accounting software for small businesses in Australia. It has all the functionality to meet the requirements to meet the needs of most small and medium size businesses.

What makes xero stand out is the number of add-ons that connect to it. If your business has a need or requirement that Xero doesn’t do or you want something more customised, then an add-on can be purchased. The add-ons integrate with Xero and effectively increases the software’s capabilities. Xero also has excellent online help that generally get back to you with a quality answer within a few hours.

A full list of Xero add-ons can be found at the Xero App Marketplace.

The book that we recommend to learn to use Xero is Xero for Dummies by Heather Smith. I have been fortunate enough to meet Heather a few times. She is the most knowledgeable person I have ever meet regarding accounting and add-on software.

While in the learning stage of using Xero, I would not recommend hooking an add-on into Xero. Don’t get me wrong, I love add-ons, but they can be difficult to configure for those not experienced.

Xero also has some very good training and links to certifications courses in their Xero Central learning area.

Sign up to try have a trial of Xero. The trial period offered by Xero is generally 30 days

Learning to use MYOB accounting software

The majority of people who choose MYOB as the first accounting software to learn generally do so because their business is already using MYOB.

For the first 10 years or so after the introduction of GST into Australia, MYOB was the largest supplier of accounting software for small business. Poor customer support has seen the product decline over the last 10 years.

Having said this, MYOB still is good software for small businesses. I used to be a raving fan of the product before getting hooked on Xero .

The book I would recommend purchasing to lean to use MYOB is MYOB Software for Dummies by Veechi Curtis.

I personally have not read this book. I first learnt to use MYOB in 2007 using other books on MYOB that Veechi Curtis wrote. There books were titled “Making the Most of MYOB” and “Making the Most of Payroll with MYOB Software”. These books were exceptional for the versions of MYOB that MYOB had on the market at the time. I have no doubts that Veechi would have delivered again.   

I have been told MYOB is better than Xero. Should I learn MYOB instead?

There is a never ending debate in accountant and bookkeeper forums of which is best – MYOB or Xero. To add to the mix, there is always someone who pipes up and says Quickbooks or Reckon are better.

Most bookkeepers and accountants in Australia prefer to use Xero and I’m in this boat as well, but this is only a matter of personal opinion. MYOB, Quickbooks and Reckon all have their place in the market as there are those who are just as passionate about MYOB, Quickbooks and Reckon as there are about Xero.

What package your mentor prefers could also have a bearing on which package you select. Your mentor will find it hard to teach you if they are not familiar with the software you have selected.

Is there anything else I need to consider before deciding to do the bookkeeping for my business?

The next major factor to consider is whether you able to meet the deadlines often required of bookkeepers.

Activities undertaken by bookkeepers such as BAS lodgements, wages processing and payments, single touch payroll filing, superannuation guarantee reporting and payments to name a few are all time sensitive activities that bookkeepers undertake. Before you commit to doing the bookkeeping you need to be sure that you can make the deadline requirements.

Failure to meet deadlines can often be harmless or incur a small penalty. This may however not always be the case.  Take for example superannuation guarantee payments. Payment as little as one day after the due date may result in the whole payment becoming non deductible. There is also complex legislation around super, pay as you go withholding and GST. If lodgement doesn’t occur by a certain date, the directors of the company may become personally liable for the debt.

What are the alternatives if you choose not to do the bookkeeping for your business?

The best alternative is to have a professional bookkeeper come in and perform the job for you. Professional bookkeepers are quicker and more accurate than a non professionals.

Things to look for when engaging or hiring a bookkeeper include:

• are they competent with your businesses accounting software your as well as any add-ons that may also be in place
• can they meet the deadlines listed above
• are they familiar with, or have an experience level that will make it easy to adapt to your industry
• they be trusted with sensitive information

Hiring an employee or engaging a contractor are the most common ways to hire a bookkeeper. If you engage a contractor, additional things to check include:

• they are a registered BAS agent with the Tax Practitioners board. This can be done by doing a search on the Tax Practitioners Board website.
• they have up to date professional indemnity insurance