Should you do your own bookkeeping?

If you’re running a small business, you may have baulked at the cost of hiring a specialist to take care of your bookkeeping. Instead, you may have wondered whether it’s possible to handle this yourself.

We have a look at what bookkeeping entails, whether you should take this into your own hands, and some tips and tricks to get you started.

Tip: Have a look at our financial calculators and find out how they can help you.

What is bookkeeping?

Bookkeeping is the act of monitoring, recording, and filing financial transactions on behalf of a business. This forms part of accounting, and it involves, among other things, keeping track of receipts, moving money between accounts, and preparing invoices and tax reports.

According to Robert Glaus of Thebe Accounting and Associates, bookkeeping takes place on a monthly basis, and the bookkeeper balances the cashbook and pays the taxes. He notes that maintaining accounting records is imperative.

Bookkeeping is generally facilitated by accounting software or spreadsheets, and the data can be filed online or in physical binders. Each bookkeeper or business has their own preference for calculating and recording the figures – they just need to balance in the end.

READ MORE: Small business owner? This is how to be tax compliant

Should you do your own bookkeeping?

Bookkeeping can be a complicated task, especially if you don’t have a background in accounting or finance. However, this doesn’t mean that you won’t be able to figure it out.

Zwelibanzi Phiri, managing director of Capnovation, says that you can look for YouTube videos on the subject, and maybe enroll in a short course.

“Depending on your learning style, you could also get a textbook. If you are in doubt about how to learn more about bookkeeping, please speak to someone who’s knowledgeable on this,” says Phiri.

READ MORE: Should you run your personal expenses through your business?

How to get started with your own books

If you have already done some research on bookkeeping and you’re ready to get started, you can begin your journey here.

According to Phiri, the first thing you need to do is establish a reliable accounting system that is suitable for your business and the size of your entity.

He adds that you will also need to pick an accounting system that best suits the needs of your business. When making this selection, he recommends asking yourself the following questions:

• Does it cater for VAT?
• Does it cater for import and export taxes?
• Does it generate the necessary reports?

Phiri says that if you answer yes to these questions, then you've selected the appropriate accounting system and you’re ready to get started.

“Now you will need to set it up properly and then you need to understand the basics of bookkeeping. You need to know what income, expenses, liabilities, equity, and assets are. Once you understand the above-mentioned components, then you're on track to start your basic bookkeeping,” says Phiri.

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