Business Owners: necessary to learn about bookkeeping (accounting)? | GTAMotorcycle.com

Business Owners: necessary to learn about bookkeeping (accounting)?

Pistachio Nuts

Pistachio Nuts

Well-known member
For those who've started their own business, do you think it's necessary to learn/know about bookkeeping? Or, do you just get a 3rd party to do the books for you?

The reason I'm asking is because I'm planning to start a business in 2-3 years from now (I actually have a handful of clients now, but it's so few that I still consider this thing a "hobby"). Anyway, when I do register my business, I'll very likely be doing my own books (or should I?).

I have no background in bookkeeping, and wondering what would be the best way of learning to do the books? Is bookkeeping best learnt through books, school, and/or on the job?

I'm seriously thinking about taking some Continuing Ed courses at George Brown. But, it's a big time commitment. And, I'm not sure if school is overkill, not to mention the time (100s of hours) and money (a few grand) being spent/wasted. Can anyone recommend what courses I should take? Here's the list: https://coned.georgebrown.ca/courses-and-certificates/subject/accounting-and-payroll/

Or, are there any books you can recommend?

Thanks, y'all! :D
 
Most people start by doing their own bookkeeping. Hire a bookkeeper once you start spending too much time tracking numbers. Fundamentally, it's not that hard. The courses you linked to are way overkill for most people. The time and money you spent in all of that school would be better invested in the money making part of your business.

Strange first post on a motorcycle board?
 
Very easy to do on your own with modern software.

Govt remittances, payroll, HST statements, T4s. All no brainer nowadays with the software to help.
 
Yes... You should learn/ know about bookkeeping.. Regardless if your the one doing it, employ someone, or outsource.
I don't think anyone can give a real opinion, regarding whether or not you should outsource, without knowing more about the business.
 
As a former CPA absolutely yes. With just a basic knowledge of accounting you'll be more likely to catch mistakes and understand your business. Accounting systems are great but I've seen silly companies use a $10,000 software package like a check book and smart companies use quick books like a savage ERP system.

Accounting is pattern recognition. It's the ability to look at a GL account for this year, compare it to the same account code and time from last year, investigate large differences and forecast the same account code for next year.

Without a system to allow you to see this angle of the business you'll effectively be following your gut to make business decisions. This makes it very hard to set goals for growth and truly understand where the majority of funds are spent. Not to mention - if you ever take out a business loan you'll definitely need a set of financials.

Take the courses. Why build a business only to be stuck trusting a $15 per hour bookkeeper to give it to you straight.

Something as simple as knowing how to manage and track your accounts receivable can mean thousands more in usable cash for your operations.


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I hand over a pretty simple list of transactions for the year to my accountant, and they do everything for the year for about $1000 - not worth my time to do it myself. If I spent 84 hours in a basic course, I lost $.
 
it's not worth your time to do the bookkeeping or accounting, you should focus on growing your own business. it's time consuming and annoying especially if you have money coming in daily via MSP.


I did learn it just to be able to check to see if they are entering it properly. Do payroll yourself. it's stupid easy and fast (5 min of your time).
 
Learn at least basics so you can follow your own cash. Nothing worse than having a book keeper that figures out you have no idea how to follow the money. It can get expensive.
 
mikbusa said:
I hand over a pretty simple list of transactions for the year to my accountant, and they do everything for the year for about $1000 - not worth my time to do it myself. If I spent 84 hours in a basic course, I lost $.
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what would they charge you for A/R analysis? or if you wanted to increase your cash flow? did that $1000 buy you any errors found or year over year budget analysis?

something tells me you don't make or follow a strict budget and have probably had about the same income each year. if you actually knew minor details about the numbers you could make decisions that would help you more money every year.

I'm not saying do the books I'm saying understand a general ledger, cash flow statement and balance sheet.



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Book keeping is IMO basically math and you can do that yourself. Accounting is a whole different issue.

Accountants know tax law and keep you out of trouble while advising you of various pitfalls, more profitable paths etc.

Spend your education dollars where they will make you money but take enough book keeping to ensure you know if you're being ripped off.

How much you need to know depends on the number of employees you will have, loan amounts, lines of credit etc.
 
MurfSVR said:
what would they charge you for A/R analysis? or if you wanted to increase your cash flow? did that $1000 buy you any errors found or year over year budget analysis?

something tells me you don't make or follow a strict budget and have probably had about the same income each year. if you actually knew minor details about the numbers you could make decisions that would help you more money every year.

I'm not saying do the books I'm saying understand a general ledger, cash flow statement and balance sheet.
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A/R analysis? I do consulting, I sell hours, I get paid on time or they get cut off, their loss, no analysis needed.

Increase cash flow? Work more hours. Analysis done.

The $1000/year does catch errors, I'm no accountant. Never been audited of had any year end irregularities, and provides advice legal write off strategies, much subtleties.

Income has not been consistent, some years are up 150%, he tipped me off that by sitting on too much $ in business account, it could be declared
redundant, and my business of 1 person could lose small business status. That could open on a can of worms I don't care to get into.
Stuff you are not likely to know unless it's what you do for a living.
 
Take a course on/that includes Accounts Receivable Analysis. If you decrease your average time in A/R it will decrease bad debt and increase cash flow. It will feel like you had a ton more sales - pair that with an actual increase in sales and you're really cooking.


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I'm in the same position as MikBusa but on a slightly bigger scale. We (2-person business, incorporated) pay someone part-time to do the accounting, because neither of us have the time nor the inclination to do it.

Yes, you still need to keep tabs on what's going on to avoid being ripped off and to stay on top of slow payers.

Accounts past due ... it happens. Only some aspects of the time to get paid are within our control. I do my part ... as soon as I have enough information to finish something, it gets shipped and it gets invoiced on the next day that the accountant is working (part time - that's how it is). The priority is always the same ... on-site work, then jobs that can get finished and shipped, then jobs that can move forward even if I can't finish them, then quotations for jobs that we will probably get, then answering the random calls and emails from repeat customers, then dealing with the wishful thinkers IF there is any time left in the day. Don't have time for the routine accounting matters - my hourly rate is better spent doing what I'm supposed to be doing and paying a piece of it to the accountant to do their thing.

Most of our business is with large corporations. You can't change their payment terms. You can certainly prioritize jobs based on how long they take to pay ... and let the slow ones know why their schedule keeps getting bumped ...

We certainly already work smarter. Part of working smarter is paying other people to do stuff so that I don't have to.
 
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mikbusa said:
You enjoy talking out your ***? More hours = more $. Simple concept.
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It depends on the industry. If more modern equipment makes you faster you can charge more per hour and pay yourself more while still paying off the equipment. Pick and shovel vs. backhoe.
 
I'm a CPA - so not talking out my butt.

If you read my posts I said increasing cash/income without having to increase sales.

As a consultant I would think you could appreciate the concept of a subject matter expert.



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nobbie48 said:
It depends on the industry. If more modern equipment makes you faster you can charge more per hour and pay yourself more while still paying off the equipment. Pick and shovel vs. backhoe.
Click to expand...

+1 thank you.


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BTW the OP with 1 post hasn't clarified what he does. Just a warning to anyone moonlighting or hobby working, real business is different. It's hardball.
 
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