Updated: Jan 27, 2019
Many small business owners decide to do their own bookkeeping at first, particularly when they're starting out. It's a good discipline to get into to set time aside every week or month to ensure you get your bookkeeping done. So how much time do you need?
It depends (of course it does!)
The short answer is it depends. Above all, it depends on how many transactions you have every month, but it also depends on how organised you are with your paperwork, how good you are with numbers and how well you understand how to use your accounting system.
Do it weekly
I suggest that businesses set aside a couple of hours every week to get on top of their books with a longer session every month end. At the start of business you're much more concerned about cash flow, and with all the uncertainty that surrounds a new business, spending some time on the finances each week will ensure you know your numbers and understand the financial health of your business.
Another reason staying on top of things weekly is a good idea is that you'll be uncertain about your systems and processes at the start, so doing your bookkeeping regularly will help you solidify in your mind what it is that you need to be doing and you'll be less likely to forget in between.
There are some tasks which you'll want to do at the month end, like running some reports, so you might like to set aside a slightly longer session at the month end to do these.
Don't leave it until the year end
Finances really don't need to take over your life, particularly if you stay on top of them regularly. You'll soon get a good idea of whether the couple of hours you're setting aside every week is enough, and you might get to a stage where you decide to outsource some work to a bookkeeper.
It can be tempting to pile all your paperwork in a drawer and leave it until the end of the year, but I'd absolutely advise against that. Following this approach, your bookkeeping will almost certainly take more time (whether you're doing it or whether you decide to outsource it to a bookkeeper) because your paperwork won't be organised, you may have lost things, and you'll certainly have forgotten what many of your transactions were for!
Is there a checklist?
There are some key areas you should be looking at every month and how long it takes to cover these off will determine how much time you need to set aside each week or month. It can be useful to sit and work through a checklist to see how much time each job takes you each week to give you an indication of exactly how long you really need.
To help startups to understand what they need to do every month to stay on top of their finances, I've put together a free download. Working through this checklist will give you a good idea of whether you're giving yourself enough time every month to stay on top of your finances, it will also help you make sure you're doing the right things... it's a great place to start!