Start-ups often ask:
Which Online Bookkeeping Software Should We Choose?
The future of all software – including bookkeeping software – is online. This allows for much better information sharing and connectivity with distributed teams. With better connectivity and distributed teams, outsourcing many activities becomes possible.
If you outsource your bookkeeping function, it doesn’t make sense to choose the bookkeeping software. You won’t be using the software, probably don’t understand how to use it, and shouldn’t inflict it on someone else who already knows how he or she wants to go about doing the job.
SO THE QUESTION IS REALLY:
SHOULD OUR COMPANY OUTSOURCE THE BOOKKEEPING?
Every startup has limited resources – and a helluva lot to do. With so many critical things to do, startups need to focus on core functions like ‘getting out of the building’ and developing a ‘minimum viable product’.
IS BOOKKEEPING ONE OF THOSE CRITICAL CORE FUNCTIONS?
The short answer is “No”!
Bookkeeping isn’t a core function, but recordkeeping and banking are both core functions. Unfortunately many entrepreneurs consider recordkeeping and banking part of the bookkeeping function. This leads to 1 of 2 very common mistakes:
- Understanding that banking and recordkeeping are critical, core functions they set about trying to do the bookkeeping themselves – and typically spend too much time doing a very poor job.
- They outsource everything to the bookkeeper, including the recordkeeping and banking functions. In so doing they put the assets of the company at risk and can make the job of the bookkeeper almost impossible – where records weren’t properly kept from the outset.
BANKING IS A CORE FUNCTION
Don’t get someone else to do your banking for you. You are already taking lots of risk starting a small business. Don’t pointlessly add to your risk by giving someone else access to your bank accounts.
RECORDKEEPING IS A CORE FUNCTION
You’re probably already using online banking. Online banking functions automatically generate records. It is a simple matter to ‘keep’ records as you generate them. You can even go online after the fact and download banking records. But don’t wait too long. Your bank will probably archive the records after a few months. Once that happens, it becomes time-consuming, expensive and difficult (or impossible) to retrieve them.
When you deposit customer cheques to your bank account, you won’t be able to tell by looking at the bank statement whose cheque was deposited. Six months after the fact you’ll be left a confusing mess. If you deposit customer cheques it makes sense to use a deposit book – and keep details as to what cheques were deposited.
Similarly when you write cheques it makes sense to order cheques with a stub attached (and fill it out when you write the cheque). Otherwise take a picture of it with your phone and email it to yourself.
When you buy something online, print a copy of the invoice or receipt to a PDF file and store it where it can readily be found later.
If your recordkeeping system consists of “just ask me and I’ll get it for you”, you’re forcing the bookkeeper to document the missing records, inform you what he or she needs and then wait until you get around to getting the relevant records. This approach is very common – and hopelessly inefficient.