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Just because you’re an entrepreneur doesn’t mean you have the time, the know-how or the interest in doing the books for your business yourself. Hiring an accountant might be one of the best decisions you can make. That’s because it can free up an enormous amount of energy having somebody else set up your accounting system, see to your tax and check your books every month. If you’d prefer to set up your own system, read on for some tips.

Setting up a manual system

Setting up a system for your business books can be done manually. A basic system would require that you have two lever-arch files. Use one of the files for your income and the other for your expenses. You will also need a pack of dividers for each file for every month of the year, as well as an analysis book.

Label your income file and keep copies of all the invoices you have issued in any given month. Add the receipts you issued to paying customers. This will also help you identify what money is owed to you by your debtors.

Label your expenses file in which you record all your expenses in any given month. Your expenses would include cost of sale and running costs. File the invoices and proof of payment in your expenses file.  Add up all your income and expenses at month-end to find out what your profit (or loss) is.

Setting up an electronic system

A manual system may seem like a laborious process so you might want to consider using an electronic accounting package that is specifically designed for small businesses.

The idea of setting up a system for your business books is often more painful than the actual process but once you’ve got over the first hurdle and the system is in place, you’ll probably feel a great sense of relief.

If neither of these options appeals to you, you could ask a bookkeeper to help set up and run your books for you. Either that or ask your bank if it is able to assist you in any way.

Tags: Finances