When you start your business, you will have started doing your bookkeeping in whatever way made sense to you. But you’re not trained in bookkeeping and for the most part you won’t have a clue what to do.
It is better and easier when you have a process to follow, your year end accounting will be cheaper because your books will be in a better place. Where your accountant has to do more work to correct your books, they will usually charge you. Our pricing is set based on the condition of your books, with the best price for year end accounts only available when you use our in house bookkeeping services – that’s because we know that when we do the bookkeeping, the books will be in a very good position to be able to do the year end accounts without too much extra work and checks.
In this article, I am going to share the process we use at SGW to do our bookkeeping, so that you have a framework to follow and hopefully end up with better quality records.
The framework is called the PARSAQ™ Method (pronounced “Par-sack”) – being an acronym, the first letter gives us each step in the process.
The first thing to note is that we use Xero for this process. It could be done using other accounting software and supporting tools, but the PARSAQ™ Method has been created specifically to work with Xero.
P – Paperwork
The beginning of the process is sorting the invoices, receipts, statements etc and creating an electronic version of it where there isn’t already, and then we start the process of importing all those records into Xero.
A – Approve
The next step is to approve everything that we’ve imported into Xero and have the software post the transactions into your ledger (the ledger is just a list of your transactions that will be used to form the profit and loss and balance sheet reports).
R – Reconcile
The bank reconciliation is the next thing to do. Reconciliation might seem like a technical word, but it really just means “to match” and in this case we are matching the bank transaction with the transaction that we’ve imported into Xero in the previous steps.
For example – we import a receipt for printer paper, and we match that to the transaction in the bank where we paid for the printer paper.
S – Suppliers
Our suppliers are the people we are buying goods and services from, so all your purchases will be attached to a supplier in Xero. When you buy something from someone, but you do not pay immediately (your payment terms are 7 days or 30 days for example), they become your creditor. Your creditors with very easily be overlooked when doing your bookkeeping unless you actively look at them and check that they are correct. This step includes checks to keep your payments, transactions and creditors all present and correct.
A – Accounting Journals
There are several accounting journals that you can be posting on a monthly basis to ensure you have a full picture of what your accounts would look like
Q – Queries
At this point you would go and find the answers for the bits that you got stuck with in your latest run through
Learning a new process might seem like a bit of a faff, but when you are not 100% sure what you’re doing when it comes to bookkeeping, learning a process will give you a little more confidence to go ahead and actually get it done rather than putting it off because you do not really know what you are doing.
In summary, following the process will help you prepare more accurate and useful records, making the lower fees for year end work available to you.
If you’d like to learn more about the PARSAQ™ Method and be able to implement the process in your own business, please feel free to join our free workshop: https://us02web.zoom.us/meeting/register/tZAoce2rrjoiHtdbIzcZhX2AU5fS6hLdKBy5