BOOKKEEPING RULES



Bookkeeping Rules


Introduction


Before we start into anything we first need to cover some standard bookkeeping rules that you must understand and implement immediately as it is vital for the proper execution of everything else. Fortunately they are relatively easy! 1. Have a separate bank account (and credit card, if applicable) specifically for your business.

2. NO PERSONAL EXPENSES ON YOUR BUSINESS BANK ACCOUNT (In the rare occasion that you accidentally put a personal expense on the business account, categorize it as an owner's draw.) 3. Keep Your Receipts - Store them in a file in your office or take a picture of them and store them in the cloud. This is vitally important in the event of an audit. On each receipt write on it: who, what, where, when, why, and how much. Not only does this help backup the business purpose but it also reminds you in case you forget. 4. Ditch the Cash! In the rare event cash is your only payment option, be sure to get a receipt so you can properly document the business expense.


Manual Bookkeeping vs Bookkeeping Software


Introduction


Before you can continue in the training you have to make a decision. Are you going to do your bookkeeping manually using spreadsheets or are you going to use a robust bookkeeping software?

Whichever you decide, rest assured you will get the training here to complete bookkeeping. To help you make a decision we have outlined the pros and cons of each: Manual Bookkeeping

Pros:

  1. Easy to use excel spreadsheet

  2. Great for beginners, freelancers, very small businesses

Cons:

  1. No invoicing or billing built into the software

  2. More Man Power Needed

  3. Hard to Scale

Bookkeeping Software (Manager)

Pros:

  1. Built for Scale

  2. Made for Businesses of All Sizes

  3. Invoicing, Billing, Transaction Download, etc. All Built Into the Software

  4. Less of Your Time = More Time to Grow

Cons:

  1. Monthly Fee (N$60 per Month)

  2. Slightly More Training Needed

Once you have decided which option you want to go with you can continue the training based on that option. If you have any questions, do not hesitate to reach out on our website and we can help guide you!


Manual Bookkeeping Template


Manual Bookkeeping


If you have decided to go the manual bookkeeping route we have created a template for you to use to make this process much easier for you.

This template was created in Google Docs. Send us an email and we can forward it to you or download the template from our website.


Optimus Manual Bookkeeping Template
.xlsx
Download XLSX • 127KB


Manager Software Subscription


Bookkeeping Software - Manager


Before we get started on Manager training, you need a Manager account. You have two options:

1) Send us a request to subscribe to manager

2) We will create your company and setup your initial chart of accounts.

If you go through us we have two payment options: Monthly subscription - N$60 per Month

Annual subscription - N$720 per Month


Setting Up Manager


Bookkeeping Software - Manager


A chart of accounts is a system used to classify transactions that a business incurs. Every line item in your business will be assigned to an account in the chart of accounts. This is the heart of your financial statements.

As part of your subscription we set you up with a standard chart of accounts. But of course, every business is different, so you may want to add a few additional accounts specific to your business. We are going to walk you through that, and also show you many other features built into this useful accounting software.


Connecting Your Bank Feeds in Manager


Bookkeeping Software - Manager


In order to have an accurate set of books you'll need to categorize all of the transactions that flow through your business bank account. Fortunately with Manager you can import your bank feeds to the software on a regular basis so you can then categorize them.


Reporting in Manager


Bookkeeping Software - Manager


Alright, you got your bank transactions imported into Manager, you are sending invoices to clients and getting paid and you are entering your bills to stay on top of your expenses. Now you want to gain some insights on how your business is performing.


Categorizing Transactions in Manager


Bookkeeping Software - Manager


The core of your business financials will require categorizing your business bank account and credit card transactions into the correct accounts. I usually tell clients to not overthink this process and keep it simple.

About 95% of this process will be very simple. It’s the remaining 5% that might seem a little tricky. I would encourage you to reach out to a certified accountant if you need assistance, or to send us an email for assistance.

Note: Whether you keep your books on a cash or accrual basis will play a role in how you categorize some transactions. We will be outlining the difference between the two in another category. For now we will touch on the basics.

Income Items

This is the good stuff, and means that your business is generating cash. That's exciting! Any income you receive will have to be categorized into a sales or revenue account. If you do not need a detailed breakdown of your sales you will typically have one sales account that all of your income will go into. However if you need to track various types of sales separately (e.g. by type, source, business unit, etc.) you do have the ability to create multiple sales accounts.

If you have income coming in from non-business related activity, such as interest income, you should classify this separately.

Expense Items

The expense classification is important because it can give you key insights into where your money is being spent and how you can potentially cut back on unnecessary costs. When it comes to categorizing expense items you want to be as descriptive as possible. For example, if you see a charge for Optimus Accounting Services come through you would classify that as “Accounting Fees”.

There is not always a cut and dry expense account for every transaction so use whatever makes the most sense to you. In the example above you may ask, “couldn’t I categorize the Optimus Accounting Services expense as continuing education?” The answer is yes and that would be completely acceptable. The best thing to do is put it in a category that not only makes sense to you but will also allow you to make the best financial decisions in the future.

Owner Transactions

Often times, especially within small businesses, we see personal transactions for the owners slip through the company bank accounts. When things like this happen it is important to mark those transactions as owner drawings (depending on the tax set-up). These should not be categorized as an expense but rather a transaction that affects the capital account or members loan account. The reason we do this is to make sure that any personal transactions do not show up on the income statement of the business. Incorrectly recording owner drawings as business expenses can result in penalties and fines from the NAMRA in the event of an audit.


Invoicing and Bills In Manager


Bookkeeping Software - Manager


Great, we got all of your transactions flowing through in Manager. Now it is time to start actually making money and paying bills.

Invoices and Bills must be issued on the company name. Refer to VAT specification if the business is registered for VAT.


Invoice and Bill Matching In Manager


Bookkeeping Software - Manager


Finally you are probably wondering how you apply payments to those invoices or bills that you entered. On the receipt or payment, you can select the invoice which was paid.


Common Business Tax Deductions


Tax Introduction


Being a business owner gives you an advantage over a regular employee because you are able to deduct business expenses pre-tax. This is a big deal!

Within the day-to-day life of your small business, you will incur ordinary and necessary expenses that you can deduct when filing your taxes.

So what does that mean?

"Ordinary" means they are common and accepted in the general industry in which the business owner is working. "Necessary" means they are appropriate and required in operating your small business.

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