What is bookkeeping?

Bookkeeping is the activity of keeping records of income and expenditure of money within the business. We generally
distinguish between general bookkeeping and financial bookkeeping.
General bookkeeping is concerned with the day-to-day activities of your business such as purchasing and selling
products or services. Financial bookkeeping goes beyond the reporting of your daily transactions. It is about planning
your business activities and forecasting and executing your company’s investments.
There are various bookkeeping requirements depending on your country’s legal status and regulations. As a small formal
business, it may be as simple as recording your transactions (sales and purchases) in a book and keeping the records for
a few years. As your business grows, it may involve filing tax returns, making formal payroll payments with tax implications
(if you have employees), preparing annual financial statements, etc. Depending on the size of your business, you may be
required by law to have your finances audited and reviewed by an external auditor. Please be assured that this is not meant
to penalize you

Why is bookkeeping important for your business?

YOU UNDERSTAND YOUR BUSINESS SITUATION BETTER AND
YOU DEVELOP BETTER SALES STRATEGIES

If you keep records of your business finances, you are able to assess your expenses and income and this gives
you the ability to know if your business is doing well or not. You can also see which expense items are taking
up too much of your resources and so you can find a way to reduce expenses without reducing the quality of
your products. This allows you to set competitive prices and increase your sales

YOU IMPROVE YOUR FINANCIAL PLANNING

If as an entrepreneur, you are able to remember your business transactions and clearly identify what allows
you to make profits or losses, you will be able to make good business decisions for the future of your business.
In addition, you can anticipate and foresee potential risks that your business may face and put measures in
place to ensure its continuity. Quite simply, bookkeeping gives you the visibility without which you will waste a
great deal of energy for little result.

YOU HAVE EASIER ACCESS TO FINANCIAL SERVICE

Financial institutions such as banks mainly use your registered accounts to assess your financial well-being
and your ability to repay loans. Many entrepreneurs complain that they are not supported by banks to develop
their activities or seize opportunities. Women entrepreneurs are more often concerned by a lack of access
to funding. If you can produce documents that show your activities, your cash inflows and outflows that
demonstrate that you have a good capacity to repay loans, the banks will come looking for you wherever you
are! If, on the other hand, your business is doing well, but you are unable to show this to your financial partner
with supporting documentation, you will probably never find common ground.

Challenges associated with setting up a formal bookkeeping system

There are a number of challenges that you need to manage when deciding to set up your business’s bookkeeping system.
Here are two of the most common ones:

X Incomplete records and unofficial bookkeeping activities
As an informal entrepreneur, you may not have a personal way to record your transactions in accordance with
government requirements. Should this be the case, when the time comes to complete your formalities, your records
may be incomplete due to inconsistent paperwork or documentation.

X Lack of knowledge
It is a challenge if you don’t know how to perform formal bookkeeping. To overcome this challenge, you can participate
in business management training in a program like SIYB (Start and Improve Your Business), or online training. If you
belong to a specific group of entrepreneurs and are a young person or a woman, for example, you may be interested in
business management training specifically tailored to your needs, such as the GET AHEAD training program (for women
entrepreneurs). You may also want to seek the services of an accountant who is familiar with national bookkeeping
requirements to assist you.

How does it work in The Gambia?

X Bookkeeping requirements
The 2012 Income and VAT Act and the 2013 Single Window Business Registration Act require all businesses to maintain
proper records and document annual return (see https://www.iasplus.com/en/jurisdictions/africa/gambia)

X Accounting standards
In The Gambia, The Gambia Association of Accountants (GAA) is the standard-setter for most companies in terms of
bookkeeping standards. However, to date, there are no national financial reporting standards. SMEs are permitted to
use the International Financial Reporting Standards (IFRS) which usually includes: a record of bank transactions, cash
transactions, stock (if it is trading in goods), a file containing invoices and receipts, and a list of assets owned by the
business.

X Practical support
SMEs usually refer to audit firms, accountants and business advisory firms to seek support, especially as banks,
microfinance institutions and grant projects require them to submit bookkeeping records in their loan applications.

X Tax audits
The Gambia Revenue Authority (GRA) and external auditors do check records during tax inspection visits and annual
external audit exercises. Tax inspection visits are not scheduled and tend to focus on Companies