As a business owner, there are certain accounting tasks that you can carry out yourself. You don’t need your accountant for everything.
In this eBook, we have divided up different accounting tasks into three separate levels. The higher the level number, the more Accounting knowledge is required. We go into a brief description of each task so that you may better understand what tasks your bookkeeper or accountant carries out, and whether you are able to carry them out instead.
As a general rule, we believe it is healthy for small business owners to at some point, carry out some basic accounting tasks. This helps you save money and gives you a better understand of how the accounting process of your business works.
Level 1: Everyone Can Do This
This level is made up of tasks that all business owners should be able to carry out. Although you might not know how to carry out each and every task listed below, you could easily learn just by watching a short tutorial video of your accounting software.
These tasks are commonly carried out by accounts clerks (who often aren’t qualified in accounting).
Client Data Entry – many accounting systems, such as Clever Accounting, allow you to input basic client information. These include details such as contact information, address and the VAT Number of the client. This information is required for invoicing purposes.
Sales Invoicing – when you sell a service or a product, you have to invoice the client. Creating invoices is very simple as all you need to do is enter basic details such as the date, client information, service/product description, invoice number, price, and other related details.
Issuing Delivery Notes – This document has more than one purpose. It is usually only issued when products are delivered. The delivery notes lists all the items delivered, assisting the client with confirming partial or full order fulfilment. A signed copy of the delivery note is a receipt for the supplier showing that the client has accepted the items listed in the delivery note itself.
Customer Statements – the purpose of a customer statement is to show the current status of the client account with the supplier. Very often, statements include ageing information, i.e. how much money is due more than 90 days, how much is due 60 to 90 days, how much is due 30 to 60 days and what is the current due. The statement may also show settled transactions, thus enabling both the sender and the receiver to go through any queries that may have arisen.
Registering Customer Payments – This is one of the key information to be registered. Without knowing who paid and for what, chaos will follow. There are two systems to register payments, the first one is to settle each invoice individually; the second method is to accept payments ‘on account’. This means that whatever money is paid in by the client, the payment will go to cover part or all of the invoices starting from the oldest invoice.
Registering Supplier Invoices – This function concerns those businesses that sell products or services purchased from suppliers. When supplier invoices are recorded, the products that are received are put in stock and thus, the products’ value is added to the stock value. Also the cost of the product is taken into account to set the cost price of each product. This is important as from such information the selling price can be calculated and profit measured.
Even if the purchase from the supplier is a service, the registering of such invoices is important as the costs incurred in purchasing services for resale feature prominently in the Profit & Loss statement. Failing to enter such important information will lead to distorted results in other reports.
Paying Suppliers – For similar reasons as registering customer payments, the paying of suppliers needs to be registered meticulously. It often happens, when such information is not kept, that suppliers are either paid twice or none at all, leading to either late payment penalties, or lack of credit in the future. In addition, monitoring the credit facilities offered by suppliers is made easier when proper documentation is concerned. If used to the full, and payment is made at the last moment allowed by the supplier, interest saved in overdraft may be obtained.
Stock Control – For businesses that sell products (as opposed to services) keeping track of what is in stock and where is of utmost importance. How frustrating it is for prospective clients to find out that an item that is required is either out of stock or cannot be located in the warehouse. In addition, keeping a correct and up to date register on stock is important as this will make it possible to calculate the value of the stock held. In addition, a number of business indicators can be extracted from stock information.
Bank Deposits – The registering of bank deposits is another step in the business cycle. This process will contribute towards the completion of the bank reconciliation process.
Level 2: Must Have Studied Accounting
Registering Supplier Invoices that cover services and items to be used to run the business (i.e. items & services not for resale)
Not all supplier invoices are treated the same. This is because different purchases for a business are treated differently. There are mainly three types of invoices. The first are invoices that are issued to a business relate to raw material or items that are for resale. This type of invoice was covered in Level 1. The second type of invoice is the one that is related to services delivered to the business, e.g. Water and Electricity bills; Telecommunications bills; Office repairs and other similar services. The third type of invoice is that are issued towards a Capital expense, for example the purchase of Machinery or Office Furniture.
Registering Capital Expenses – these entries affect the Fixed Assets of the business and many times also require a plan on their depreciation.
Level 3: Qualified in Accounting / Bookkeeping
A qualified accountant and a bookkeeper would have enough knowhow of the company law and tax law to be able to check all the above entries as well decide on other transactions of type not covered above.
Taking the relationship with your accountant to the next level.
As explained above there are a number of ways that your accountant may be taking advantage of you. It is because of this that we highly recommend that you invest in a strong relationship with your accountant. Having a financial expert assisting you and your management team is a strong and useful asset that will help drive your business growth.
