Introduction

I first started working as a bookkeeper in my late teens, doing handwritten books in leather-bound journals down by the docks in my hometown of Edinburgh, Scotland. Later, I emigrated to Australia, where I got a job working as a bookkeeper in the Blue Mountains west of Sydney. There I worked with first-generation accounting software, substituting the peace of those inky journals for a battle of wills (myself versus the computer) that required a bizarre mixture of programming skills and native cunning.

By my late twenties, I had a small business of my own, employing four staff and offering bookkeeping services to local businesses. I finished a degree in accounting (which contributed surprisingly little to my bookkeeping expertise), and started writing for magazines and newspapers reviewing accounting software. In the following years, I wrote a fair few For Dummies titles, including MYOB Software For Dummies and QuickBooks For Dummies.

Even with all this experience behind me, I was in a bit of a quandary as to how to structure the project that you have in your hands right now — Bookkeeping For Dummies. I started looking around at other books about bookkeeping, and found that these books fell into two camps. The first camp took a traditional approach, explaining debits and credits, general ledger postings, and so on, all with the assumption that you’re doing books by hand. The second camp were accounting software how-to guides, such as the books I’d written about using MYOB or QuickBooks.

What I felt was missing was a book written for bookkeepers that explained the principles of bookkeeping — the art of bookkeeping, if you like — in the context of doing business in the 21st century. And the book that fills that gap is the one you’re holding in your hands.

About This Book

This book talks about bookkeeping for all sizes of business, both large and small. I realise that you may be a business owner trying to figure out how to do a simple set of books for your new business, or you may be a seasoned bookkeeper working for a multi-million dollar enterprise. I address both kinds of bookkeeper when writing this book, starting with the basics of bookkeeping, and building to more complex topics later on.

How to Use This Book

Bookkeeping For Dummies isn’t a gripping novel to be read from cover to cover. This book is designed (all 21 bite-sized chunks) so you can pick it up at any point and just start reading.

If you’re a business owner and you’ve never done bookkeeping before, and you’re looking to set up a bookkeeping system for your own business, I recommend you read Chapters 1 to 11 before doing much else (although you can skip Chapters 6 and 10 if you don’t have any employees). On the other hand, if you’re an experienced bookkeeper looking to expand your skills, then by all means skim read the first few chapters, but start reading with more seriousness from Chapter 12 onwards.

Foolish Assumptions

Because I’m so blindingly sensible, I don’t make any foolish assumptions about you, dear reader. I don’t assume that you have any bookkeeping experience or even that you’ve worked in a business before (although it’s possible of course, that you’re a bookkeeper extraordinaire with 30 years experience under your belt). All I assume is that you are at least vaguely interested in bookkeeping and the results that the process yields.

How This Book is Organised

This book is split into six parts.

Part I: First Steps

In Chapter 1, I talk about training as a bookkeeper and what skills you need. I also explore different approaches to bookkeeping and give a quick rundown on the whole bookkeeping life cycle. In Chapters 2 and 3, I explain bookkeeping concepts that apply to all businesses, large or small.

Part II: Forming a Plan

The second part of this book focuses on systems: Chapter 4 talks about the bookkeeper’s timetable, scheduling what happens when; and Chapter 5 explores why all but the rarest of bookkeeping situations can benefit from accounting software. Chapter 6 focuses on setting up secure systems, and is particularly relevant if you (as the bookkeeper) are an employee of a business, or if you (as a business owner) delegate the handling of any financial transactions to employees. Chapter 7 looks at GST, and how you deal with GST on everyday transactions.

Part III: Recording Day-to-Day Transactions

In Chapters 8 to 10, I explain how to record income and expenses, keep track of how much money is owed, and process employee pay transactions. By the time Chapter 11 rolls around, you’re ready to start balancing your work and reconciling your bank account to check that you haven’t made any mistakes.

Part IV: Pulling It All Together

Chapters 12 to 15 are written with the serious bookkeeper in mind, explaining everything from reconciling payroll liabilities to working with inventory. I also explore tricky situations such as recording loans and calculating depreciation. If you’re an owner operator and all you want is to do your own books so that they’re good enough for your accountant to pull into shape, then you may find you don’t need to read these chapters. However, if you’re a bookkeeper working for someone else, then this advanced stuff is the real deal.

Part V: Building Reports

If you’re anxious about working with financial reports, don’t be. I devote all of Chapter 16 to explaining how you create Balance Sheets and Profit & Loss reports, and I devote all of Chapter 17 to understanding these same reports. Chapter 18 explains what happens at the end of each financial year.

Part VI: The Part of Tens

The Part of Tens is my favourite part of any Dummies title. Chapter 19 provides ten tips for bookkeepers working in not-for-profit organisations, Chapter 20 offers tactics for getting customers to pay on time, and Chapter 21 shares a lot of up-to-date industry tips for contract bookkeepers.

Icons Used in This Book

Throughout this book you’ll find icons in the margins to help you navigate through the text. Here’s what these icons mean:

This icon flags where I explain how to put bookkeeping theory into practice using accounting software.

Want to be streets ahead of the competition? Then look for this handy icon.

You’ll find this icon next to stuff relating to GST or taxation (ah, such fascinating topics).

So people think that accountants and bookkeepers are boring? Another myth just waiting to be busted.

Tie a knot in your hankie, pin an egg-timer to your shirt but, whatever you do, don’t forget these little nuggets.

This icon points the way to doing your job better, faster and smarter.

Real-life stories from bookkeepers who’ve been there provide all the history lessons you could ever want.

A pitfall for the unwary. Read these warnings carefully (then you can’t say no-one told you . . .).