Bookkeeping may seem somewhat complicated at first, especially if you’re a creative business owner more attuned to inventive ideas and blue sky thinking than figures on a spreadsheet. However learning the bookkeeping basics can be more straightforward than you think and can significantly benefit your business.
How do we know this? Well because we are expert bookkeepers ourselves and although we aren’t looking to do ourselves out of a job we also aren’t gatekeepers. In fact, we think that all our clients should be financially literate when it comes to their business. Rather than keeping you in the dark with our bookkeeping secrets, we are here to offer some help. So, is bookkeeping easy to learn? Let’s find out.
Understanding the Basics
Bookkeeping is essentially the process of recording and organising your business’s financial transactions. It involves tracking what comes in and what goes out. The core components of bookkeeping include:
- Recording Transactions – Noting down every financial transaction your business makes, such as sales, purchases, and payments.
- Categorising Expenses – Grouping your expenses into categories like office supplies, travel, and utilities to understand where your money goes.
- Reconciling Accounts – Ensuring that your financial records match your bank statements.
- Generating Reports – Creating financial statements such as income statements and balance sheets to get an overview of your financial health.
Why Bookkeeping Isn’t as Hard as It Seems
Bookkeeping follows a systematic process, which means once you understand the steps, you can follow them consistently. Thanks to accounting software like Xero, much of the heavy lifting can now be automated. These tools simplify data entry, categorise expenses automatically, and generate reports with just a few clicks. However, this doesn’t mean it’s all plain sailing; while it may sound like a doddle, you do need to know what you’re doing or you can find yourself in a spot of bother.
So What Can Go Wrong?
While it is commendable that you are considering doing your own books, there is a reason most people leave it to the professionals. Here are some of the most common issues that can occur:
Financial Discrepancies
Inaccurate or incomplete financial records can lead to discrepancies that are a real headache to resolve. These mistakes result in incorrect financial statements, making it hard to understand your business’s true financial position.
Cash Flow Issues
Without accurate bookkeeping, you might lose track of how much cash is going in versus how much is coming out. Which can potentially lead to every business’ worst nightmare – running out of cash. This can affect your ability to pay your bills and even run your business so it is extremely important you keep track of your cash.
A Call from the Tax Man
If your books are not up to scratch then it can lead you to paying either too much or not enough tax. Filing your taxes incorrectly can result in penalties, fines, or audits, which is never a fun experience. Accurate records are essential for ensuring that you are complying with tax regulations and take advantage of any available deductions that are available to you.
Poor Decision Making
Without reliable financial data, making informed business decisions becomes challenging. Poor bookkeeping can obscure the numbers, leading you to make ill-informed financial decisions that could harm your business.
But it’s not all doom and gloom. If you are looking to learn more about bookkeeping, there are some ways to make it a smoother ride.
Tips for Creative Professionals
- Start with the Basics – Don’t run before you can walk familiarise yourself with basic accounting principles and make sure you understand how they work before jumping
- Use Accounting Software – Invest in accounting software. Trust us when we say this will save you a lot of time. Afterall we are Xero accountants ourselves. Here is why we say it is the best software for small business.
- Learn the Language – Understanding common bookkeeping terms like assets, liabilities, equity, revenue, and expenses will make the process much smoother.
- Keep on Top of Your Accounts – Running a business is hectic, but setting aside time to review your accounts consistently is essential. Regular reviews will prevent small issues from ballooning into bigger problems, save time, and ensure your finances stay organised
But before you go riding off into the sunset with your newfound skills. It’s important to note that bookkeeping is not accounting. If you are looking for in-depth financial insight and analysis into your business, then you will need to find an accountant. If you are confused about the difference, then read our blog on the difference between bookkeeping and accounting.
Here at Raeden we actually do both. So if you are looking for more comprehensive financial assistance then find out more about our accounting services for creatives.
So, Is Bookkeeping Easy to Learn?
With the right tools and can-do mindset, you can definitely learn the basics of bookkeeping. While it might take some time to get the hang of it, bookkeeping is a skill that can greatly benefit your creative business, especially when you are just starting out and may not have the backing of a big finance department to guide you.
By keeping your finances in order, you’ll have a clearer picture of your financial health, allowing you to make informed decisions and keep your business on track. However, it is important to remember that while you may master the basics, nothing compares to hiring a professional bookkeeper to ensure all your finances are in perfect working order.
When you are just starting out, you may want to save costs and manage the finances yourself. But as your business grows, you will most definitely require the services of an experienced bookkeeper. A professional bookkeeper brings expertise, precision, and efficiency to the table, ensuring that your business’ finances are managed correctly and comprehensively.
Moreover, managing your own accounts can be time-consuming, especially as your business expands. A professional bookkeeper frees up your time, so you can get back to doing what you do best: running a successful business.
If you are looking for skilled bookkeepers to expertly manage your money then get in touch. At Raedan, we take care of all your financial needs so that you can focus on growing your business.
