Accounting Templates for Small Businesses – Right or Wrong?

Accounting Templatesfor Small Businesses – it is easy and inexpensive to use accounting spreadsheets but are they the correct choice? 

We all know that there is a legal requirement to maintain accurate accounting records covering your business transactions. The tax man, the VAT man and a miscellany of compliance regulations means that accurate bookkeeping records are essential. 

Notwithstanding the above, keeping correct information is vital if you want to run your business successfully and effectively. 

But, how to do it, and which method to use, is a problem for many new and growing small businesses. 

Many years ago, there was only one real choice, your bookkeeping records were kept manually with Cash Books and Ledgers to help you organise records. Even today many small businesses still use handwritten records even though they can take up a significant amount of your business time and it is very easy to make errors. 

Accounting Templates 

One of today's alternative to handwritten ledgers are, Accounting or Bookkeeping Spreadsheets. 

You can easily set up your bookkeeping spreadsheet to record and analyse your business transactions, you arrange your data in columns and rows, and, using the spreadsheet functionality, all of your totals will simultaneously calculated. 

However, this method is no better than handwritten records, it is still prone to errors which may go unnoticed, and if no reconciliation procedures are carried out, then your data will be inaccurate and misleading. 

Accounting Software 

So, the obvious choice must be to use accounting software. 

Here, you only need to record your transactions once and all the corresponding entries are performed automatically. This enables you to maintain a check on your customers and suppliers, VAT is dealt with automatically and most systems will prepare a number of useful accounting reports. 

However, in my experience, the use of proprietary accounting software can have some drawbacks for new and smaller businesses. 

Firstly there is the issue of cost. Accounting software is relatively expensive and an annual maintenance contract is often required, which can add significantly to the cost. 

Secondly, Small Business Accounting Software is usually designed with a 'one size fits all' philosophy, and in an attempt to match the software’s functionality with your requirements, the developers compensate by having complicated set up routines. Great, if you understand what you are doing, but potentially disastrous if you get it wrong. So, it is essential that you obtain professional help to minimise these problems. This again increases your costs. 

Thirdly, in my experience many business people find that even the most basic accounting system is too complicated, and, if they do not have good bookkeeping skills they will fail to use the system correctly. 

Is there a solution ? 

There appears to be little choice for many small businesses (those with less than 100 transactions a month).  The requirement is for an inexpensive, easy to use, easy to set up and easy to understand bookkeeping template system. 

In an earlier article ‘Accounting Software – are accounting spreadsheets the answer for small businesses’ I examined the basic requirements for small business accounting. I concluded that provided good control mechanisms were in place, then a well-designed accounting spreadsheet could be the answer for many small businesses.