Four reasons why every business owner should know about bookkeeping

Bookkeeping is a skill that is sadly overlooked in many small businesses and entrepreneurial ventures, because business owners try to minimise expenditure on "extras". However, bad financial management - both on the large and small scales - leads to the closure of over half of all new business ventures. In this light, having a bookkeeper on staff, or having bookkeeping skills yourself, means that you keep track of the day-to-day administration of financial aspects. Here are four compelling reasons to learn about bookkeeping if you run a small business.

1. You can keep your own books

Every business needs a bookkeeper on staff, so why not be your own? If you have an eye for detail and basic numeracy skills, you can train to be a bookkeeper. Since you don't need any specific qualifications just having the skills is enough and means that you can keep track of the most important part of your business - your cash flow.

2. Check up on bookkeepers

Many business owners fear that their bookkeepers are making mistakes or, even worse, stealing from them. If you are concerned, the best way to make sure your bookkeepers are on the right track is having the skill and knowledge to spot-check their work. Even if you trust your bookkeeper, it always pays to look at - and understand - your daily financial records.

3. Avoid fines from SARS

Not keeping books properly is like a pebble that starts a rockslide - small initial mistakes can lead to very costly fines and time-consuming problems down the line. Bad bookkeeping leads to inaccurate accounting (or high accounting fees as the accountants try to sort out your finances), paying the wrong taxes and potentially crippling fines from SARS. As a business owner, you are responsible for your finances, so make sure you have the skills and knowledge to keep your own books or make sure they are being kept properly.

4. Manage your cash flow better

Accurate and up-to-date financial books give you an excellent picture of how much money you have on hand, and how much you owe or are owed. Having this knowledge empowers you to make sound financial decisions, accurately predict your income and follow up on people who owe you money. The better you can manage your daily cash flow, the easier and cheaper it will be to do your annual taxes, audits and accounts.

For more information on the University of Cape Town Bookkeeping course contact Tamsin on +27 (0) 21 685 4775 or az.oc.retramsteg@nismat or visit www.getsmarter.co.za.