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How do SMEs do their Bookkeeping?

Bookkeeping is the process that tracks the financial health of your company. Here's some common ways to go about it.

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Bookkeeping is essential for every business.

No matter how large or small or which country your business resides in, bookkeeping is the process that tracks the financial health of your company.

As your company grows, your books usually become more complex and the pressure increases for the owner to maintain a good schedule of bookkeeping. The accuracy of your financial information is pertinent to how you make informed business decisions. Making business decisions based on inaccurate financial data can lead to the demise of your company, but this can be prevented if you can maintain good bookkeeping hygiene.

Having accurate books is also essential if you are seeking for a bank loan, or you wish to raise a seed round for your startup, as any potential stakeholder would want to have an accurate view of your financial data.

There are several ways for startups and SMEs to do their bookkeeping, depending on the size of the company, the nature of business and the budget allocated.

Pen and Ledger

There’s nothing wrong with taking on tasks related to your business on your own.

If you have a small business, you know it as intimately as anyone else does. While some want to maintain full control over their books, for others, it’s a necessity.

If you’ve been able to stay on top of everything related to your business, doing it yourself could be the ideal bookkeeping solution. As long as you’ve got all of your invoices saved and you’ve been dutifully filling in your books, this could be a breeze.

If you’re the type who learns quickly, you’ll be able to get a strong understanding of how the financial side of your business is operating. You might spend more of your days working on products, inventory, and marketing.

There are downsides to handling your own finances despite the control you have. Bookkeeping is a time-consuming and at times tedious process, meaning more time spent in front of spreadsheets, and less time growing your business.

Cloud Accounting Software

Leading accounting software like Xero and Quikbooks takes traditional accounting online, allowing you to save your books in the cloud, saving physical space and becoming more accessible. On top of which, modern accounting software can also integrate with most common online payment systems such as Stripe, and Paypal.

Entering the world of e-commerce without cloud accounting software is akin to walking on a highway, without smart bookkeeping solutions, keeping track of invoices is a time-consuming headache.

Accounting software nowadays are accessible, and usually cheaper than hiring staff. You’ll also have access to support channels and tutorials that can help you manage your software.

The downside is that you won’t get personalised advice and tax support that comes with a full-time staff. Time spent learning accounting software is also time not spent growing your business, and you can spend a lot of time diving into mastering accounting software.

Even though this new type of accounting software is marketed towards everyday business owners, it can still be quite complex to master. It’s an option for tech-savvy and budget-minded.

Hire a Permanent Accountant

Once business starts taking off, you may be considering hiring an on-site bookkeeper. Even if you’re a non-traditional company selling non-traditional products, the standard practices could help make sure you have the room to innovate.

This way, you’ll get a well-trained professional who you can count on for all of your budgetary needs.

You won’t have to keep tracking down every financial record, expenditure, and transaction while you’re managing everything else. Also, once you start growing your staff, you can start spreading work around more evenly and improve morale in your office.

A well-managed team can help to support each other and to facilitate growth. With a shared set of skills around, you’ll find that you’ll be able to tackle problems better than you could on your own.

You need to make sure you’re ready to train and manage your bookkeeper. If you just let them freestyle in your books, you might be surprised with what you get at the end of the year.

Even a well-trained and experienced bookkeeper will have their own style. Make sure your goals are clear to them before they begin.

One major downside of hiring a in-house bookkeeper is obviously the cost. There are more cost effective alternatives such as outsourcing your bookkeeper. Each option has their pros and cons.

Outsourced Accounting

As wonderful as it would be if Xero generated perfectly accurate, understandable books each month on its own, it cannot do it on its own. Bookkeeping software exists to be operated, and if you want that process to be automated, you’ll need the help of AI and humans.

There’s been a huge surge of outsourcing used by small businesses in the last few years. Outsourcing your bookkeeping could allow you to take advantage of the positive aspects of cloud accounting without having to handle everything on your own.

Bookkeeping essentially tracks and how money has moved into and out of your business. To make sense of your books each month, you have to look at multiple data sources such as your bank statements, payroll statements, credit card statements, invoices, etc.. Recording that information is and lends itself well to smart automation.

But other parts of bookkeeping — such as making sense of that data, handling unexpected use cases, and explaining everything — are better done by experienced, human bookkeepers. That’s the premise behind why companies like Binery exists.

Binery automates repetitive tasks while leaving the rest in the capable hands of our bookkeepers. Automation takes care of all the simple, error-prone, repetitive bookkeeping tasks, while Binery’s bookkeepers have more time to spend directly on client questions and concerns.

In short, Binery employs expert bookkeepers and empower them with software automation. They track everything through our proprietary platform so you’ll have easily accessible, readily transferable, and accurate data, all on a platform that integrates well with other awesome financial tools.

Whether you’re preparing for your next round of funding or trying to build next year’s budget, you’ll always have the information you need in a simple, easy-to-access format. Binery provides monthly, quarterly, and yearly financial statements such as balance sheets, P&L, and cash flow. And if you want to know something specific, your dedicated bookkeeper will be able to provide that information anytime.

Choosing What Is Right For You

Choosing the right solution for your bookkeeping needs is essential to keeping your business going.

If your business grows at the pace where you’re making any profit at all, your bookkeeping could quickly grow out of control. Make sure whoever you hire to manage your business gets to know how your business runs and feels comfortable giving you feedback.

If you head in the wrong direction, your bookkeeper could save you from a nasty tumble.

We think you should give Binery a shot and get leverage on all the advantages a bookkeeping partner using technology can offer.