Hi there, Michael Elliott with Camp and Park Accounting. I am ‘The Campground CPA’ coming to you today with question number three in our “Ask the Campground CPA Question Series” – Campground Accounting & Bookkeeping: what is it and how do I do it?
Today’s question came from a campground owner who recently asked me to explain what bookkeeping is – what do you mean by bookkeeping? You accountants throw the term bookkeeping out there all the time but what exactly do you mean when you say that and why is bookkeeping important. And how does bookkeeping for a business differ from the personal bookkeeping I do.
I am going to try and answer all three of those things.
First and foremost, what is bookkeeping?
Bookkeeping is a systematic method of keeping your books and records for your business. So you might say, “Michael, boil that down and make it a little simpler”. It’s a record or recording of all of your income and all of your expenses during the year. That means breaking the income down and breaking the expenses down into various categories.
For Campgrounds and RV Parks, the various types of revenue might be short term RV rental sites. It might be cabin rentals. It might be tent sites and it might be store revenue. Those are some of the various categories that we would break down the revenue for Campgrounds and RV Parks.
So then in terms of the expenses, what are some of those? We might have repairs and maintenance expenses. We may have office supplies, cleaning supplies, or payroll wages. Those are some examples of expenses.
Bookkeeping is gathering all the income and expense data from the ecosystem which your campground operates – the various credit card accounts, bank accounts, any money you spent personally, etc. First you need to get that data from the various sources and then you can start consolidating it into one place and entering it into some sort of system so that you can track how your income and expenses are stacking up throughout the year.
Now there are a number of different tools that make bookkeeping much easier. You could use something like a plain sheet of paper and keep track by hand….and that works fine for some folks. You could use a ledger pad and things like that. I don’t necessarily recommend these options for most folks because there are more efficient ways.
You could take a step up from there and use an Excel spreadsheet or something like that. Or you can take another step up by using some kind of automated accounting software.
The most common software that is used for bookkeeping is QuickBooks Desktop. It is used by about 80% of small businesses in the United States. That number is dropping a little bit overtime but traditionally that software is used by 80% small businesses in the United States It is a full-service bookkeeping software – meaning just about everything you want to do from a bookkeeping perspective for a Campground or RV Park, you can do inside of QuickBooks Desktop.
You can even have it start to automate some functions by having it download various transactions for you and some of the reconciliations are mostly automated.
There are a number of other tools out there that are cloud based – meaning they are hosted online. Our favorite is Quickbooks Online. We find that to be the most user-friendly of the various online softwares.
There is also one called Xero that you could look into as well.
Once you have selected an accounting software, you should begin to learn about it and what it can do for you. As I mentioned, you can use some of the automation tools to pull in some of the data.
When we do back-end bookkeeping for our Campground and RV Park clients (where we take over the whole back-end), we are integrating their credit cards and bank account data as well as their reservation system whether it’s Campspot, ResNexus or if you’re a KOA park – Kampsight or K2. We are also often integrating the Payroll data as well.
We then pull all of that data together and begin to classify the expenditures and reconcile the data and produce financial reports.
Those are things that all of you should be doing all the time consistently inside of your accounting system whatever that may look like.
One of the keys to doing bookkeeping well is to make sure that you’re staying up to date on it.
I understand that a lot of you are not necessarily trained bookkeepers, you didn’t go to school to do accounting or anything like that and that’s fine. The number one key with bookkeeping is just to stay on top of it. Be consistent in your time, be consistent in how you enter the data and then ultimately at the end of the day you are going to end up with a pretty good set of books.
Another tip I’ll kind of throw out there for using QuickBooks desktop or QuickBooks Online. If you can’t figure out how to do something the number one place you should go is YouTube.
You usually can find a tutorial or a walk-through helping you with your question. We just did a tutorial demo on YouTube and within a week or two several thousand people had viewed that tutorial to figure out how to solve the problem they were having. YouTube is a great place to go if you are having trouble figuring out how to do something in QuickBooks.
So there you go. That is a high-level overview of what bookkeeping is.
Now, why is bookkeeping important?
This is an interesting question and one that I answered recently with a campground owner and they basically asked me, “Michael, what’s the point of doing bookkeeping?” They said we are basically just doing our bookkeeping so you can do our tax return at the end of the year.
I said there’s basically two reasons to do bookkeeping.
The first reason is so that you can have your tax return done with accurate books and records.
The second reason is to have accurate financials so that you can run your business.
Those are really the only two reasons I can think of to do bookkeeping. I told this campground owner that one of these reasons is really really really important, the other one is just kind of important.
The kind of important one is the tax reason – meaning yes it’s important. We need to have accurate books and records to do the tax return.
But the really important reason you need to do bookkeeping is so that you have the data at your fingertips, in a real time fashion, so that you can make decisions about how your business is operating, about how your expenses are flowing, about how your revenue and expenses are comparing to prior years, how your numbers are comparing to your budgets, etc.
There are a lot of really really really important reasons inside of that realm of having financial data to run your business and I cannot emphasize enough how I encourage you to put a bookkeeping system into place so that you understand how your numbers are flowing throughout the year.
And then as a result, you are going to have accurate books and records to prepare your tax returns which will hopefully save your money because you are capturing all of your expenditures and things like that.
Don’t get discouraged if you simply do not have the time to do your bookkeeping.
You can look at outsourcing your bookkeeping either to a per diem bookkeeper, an employee who has bookkeeping skills or just outsource it to a firm like ours or another outsourced accounting firm who can really take over the back end of bookkeeping for you. Someone that can do the bookkeeping in an efficient and timely manner so that you’ve got real time data and you don’t have to worry about it. You have a lot of options out there.
But number one just remember that you really really really need accurate financial data so that you can make real time decisions that are going to impact your business
The last thing I want to hit on here is what the difference is between personal bookkeeping (like keeping a check register) and business bookkeeping.
A lot of us are very familiar on the personal side. We keep an ongoing balance in a check register of what is in our personal bank account and we may even reconcile that against the bank statements every once in a while to make sure it is jiving.
Oftentimes when you’re doing your personal bookkeeping, you’re just wanting to ensure you know how much cash is in the bank. But when we’re doing bookkeeping for a business we are not just wanting to understand how much cash is left, but we are also wanting to understand where our money went.
We want to understand the trends of how our money is flowing so we can make adjustments. We can look back and say, hey did we spend too much on x, y, or z. I would say that is the fundamental difference to understanding how bookkeeping works.
If you take nothing away from this video it would be this: please do your bookkeeping, keep it up-to-date, keep it timely. And if you need help…get help.
If we can answer any questions for you on bookkeeping or anything as it relates to Campgrounds and RV Parks, please reach out. We exclusively serve Campgrounds and RV Parks at Camp and Park Accounting and we are more than happy to help you.
If you have any questions you would like us to answer on the next episode of the Ask the Campground CPA Question Series, please shoot me an email Michael@CampAndParkAccounting.com or leave a comment below and we will be happy to answer it.
Have a great day!
