BOOKKEPING AND HOW TO SAVE COST ON IT.

Most small-business owners in Kenya view bookkeeping as a burdensome task that takes them away from running their business. It makes others nervous, and they may second-guess their knowledge and skills in fear of the Kenya Revenue Authority knocking on their door.
You don’t have to be intimidated or bored by accounting. Successful business owners don’t view bookkeeping negatively. They have adopted a few basic procedures to stay on top of the paperwork. By doing so, they save time, money and a lot of stress.

Follow these basic steps to gain control -- and stay in control-- of your business’s bookkeeping tasks:
1. Use accounting software such as QuickBooks. Become at least generally familiar with the software: Know how to input checks, reconcile bank accounts, create reports and other data. Then choose one of five ways to maintain it:

A. Do it yourself. Take a class on the software and dedicate time each week to input information and reconcile bank statements. If you fall behind on inputting transactions, it can be difficult to catch up. This is when most people throw bank statements and receipts into a box and procrastinate. If this happens, you’ll usually end up with option E below.

B. Train and hire a family member to maintain the books. From a supervisory role and internal control system standpoint, it’s still critical to have a basic working knowledge of the software and procedures.

C. Hire a local college student majoring in accounting. You will typically find student employees to be very affordable. Just remember not to give the student too much latitude with check signing or control of paying bills. Although the student is running the system, you still need to supervise their work to make sure your books are tight.

D. Hire a local bookkeeper e.g Killian Dynamics to provide the services you need, and turn the books over to your certified public accountant for planning and tax preparation at the end of the year. A bookkeeper will certainly be more skilled and knowledgeable than you or a family member, but your cost per hour will increase. One smart strategy is to negotiate a fixed monthly fee so you can budget for the service.

E. Engage your CPA to provide all bookkeeping services, including tax preparation. This is what typically happens when your books have devolved into a mess. While this might seem like the most expensive option, your CPA team will probably be the most skilled and be able to complete the work quickly and efficiently. Even though the hourly rates are higher, the fee should be similar to what you would have paid a bookkeeper during the year to do it on a monthly basis. Another benefit of using your CPA exclusively is that you have confidence it was done right.

2. Scan your receipts, business cards and other important paperwork. Some software products, such as NeatReceipts, import directly into QuickBooks. Utilizing this type of tool will help save time and paper, and help audit-proof your record.
3. Separate personal accounts from business accounts. Don’t mix the two. Keeping personal and business bank accounts and credit cards separate will make bookkeeping much easier and help maintain your corporate veil if you have a formal entity.
4. Avoid cash. Instead, use your debit or credit card religiously. When you use cash you lose track of potential write-offs. If you have to pull money out of an ATM, note on the receipt the purpose of the withdrawal.
5. Go paperless. Storing tax documents for at least six years can be a hassle. Another option is to purchase a small fireproof safe to store important personal documents (passport, life insurance, etc.) along with a regular backup of your bookkeeping software and tax returns saved on a flash drive. For extra data protection, consider off-site physical storage or online data storage for these records and scanned files.
6. Auto-track your mileage. Keeping a written record of all your business, charitable and medical auto mileage can be a pain. Look into a satellite-assisted service, phone application, or software program.
7. Meet with your CPA at least twice annually. Review your business plans, financials, tax deposit amounts, payroll procedures and tax strategies. The cost of taxes is too high to leave your plans to chance. Just a few minutes on a regular basis can save thousands of dollars. Also, remember that your CPA should be bringing you strategies and ideas in these meetings. If the meeting consists of you throwing out ideas and your CPA shooting them down, you have the wrong CPA. Find a planner who is reaching out to you with ideas and strategies on a regular basis.

For any assistance call Killian Dynamics on this no. +254720896873 <Kenya, Nairobi> or email killiandynamics@gmail.com

Done by Killion James.
Part of this article is an excerpt from the book What Your CPA Isn't Telling You from Entrepreneur Press.

Read more stories about: Accountant, IRS, Bookkeeping

 

STRATEGIC MANAGEMENT. WHAT IS IT ALL ABOUT?

STRATEGIC MANAGEMENT. WHAT IS IT ALL ABOUT?

Although most small business owners have heard the phrase "strategic management", they have little idea what it actually means.

So what's the deal? Is strategic management worthwhile or is it all just hot air?

Without a doubt, strategic management is one of the most overused and misunderstood catchphrases in business. However, if used effectively it can have a positive impact on your bottom line and significantly improve your company's growth potential.

As its name suggests, strategic management is all about formulating strategies and the key to making it work for your business is to focus your strategizing efforts in the right areas and then manage the organization to achieve the defined strategies.

Short-Term Strategies

All the planning and strategizing in the world won't help your business if you don't have a plan of action for the short-term. Short-term strategies describe your company's activities in the here and now, and typically don't look beyond a 12-month timeframe.

In fact, some businesses do their short-term strategic planning on a quarterly basis, particularly if their industry is a highly volatile one. Since the timeframe is relatively short, short-term strategic management tends to be highly detailed and specific.

Communicate short-term strategy goals to employees and then manage employees in a way that holds them accountable for achieving strategic goals.

Long-Term Strategies

Short-term strategizing is essential, but alone it is simply not enough to help you meet your goals in business. To realize your long-term goals, you also need to develop long-term strategies, i.e. strategies covering a time span of one to five years.

Even though long-term strategies are less detailed than short-term strategies, they provide a road map that will guide you in your quest to achieve your goals and create a set of parameters that informs your short-term strategic management process.

It's worth noting that the most effective strategic management efforts employ both long-term and short-term strategies working in tandem with one another.

When managing employees, ask them how the work they are doing is contributing to long-term strategic goals and give them the leeway to modify their actions in ways that better achieve long-term strategic goals.

Functional Strategies

From time to time, you may also find it helpful to employ functional strategic management processes. These processes develop strategies that guide specific functions within your business, e.g. marketing, hiring, IT, etc.

As with short-term strategic management, functional strategic management can afford to be highly detailed because it addresses a very specific set of goals, typically over a short-time period.

However, it's also important to remember that the functional strategies you devise for your business need to line up with your short-term and long-term strategic management processes. If your functional strategies are at odds with the company's other strategies then you really haven't accomplished anything.

Strategic management does have limitations. One of the most frequently stated criticisms of strategic management is that it is often employed in an overly rigid manner, restricting the ability of businesses to react to changes in the marketplace.

If you decide to implement strategic management in your small business, remain aware that the strategies you devise are only intended to guide your activities and can be adapted to respond to market conditions.

To manage strategically, work closely with your employees to educate them on strategy options and decisions. Whenever you get the chance, emphasize how strategic thinking can help the organization.

by Killion James.